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What's the deal with dollar stores?


Stores like Family Dollar sell items at a discount; what's the big deal?
Stores like Family Dollar sell items at a discount; what's the big deal?
Spencer Platt/Getty Images

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­Do­llar stores have traditionally gotten a bum rap. Rarely does one see a person reusing a shopping bag with 99 Cents Only or Everything's A Dollar emblazoned across it to bring lunch to work instead of the more fashionable Dean and DeLuca or Williams-Sonoma bag. Moneyed patrons searching for bargains may hide their dollar store obsession like a guilty secret. Of course, when the economy's up, they usually pass right by the dollar store on their way to more expensive shops.

It's true that some dollar stores are better than others. There are locations that offer loitering panhandlers in addition to cheap consumer goods. Others can be kind of scary, with automated voices informing each entering customer that he or she will be prosecuted to the fullest extent of the law, should he or she plan on shoplifting during the visit. Of course, not all dollar stores carry such stigmas; some are quite nice inside. So, why should shopping at dollar stores have such a bad reputation in the United States?

For the most part, it's because of the brands sold by dollar stores. Off-brands or store brands are usually just like their more expensive counterparts in other stores, but with one glaring difference; they have no advertising behind them. Without advertising campaigns, off-brands have trouble inspiring brand loyalty. How would you know that your hair can be radiant and shiny thanks to that royal jelly additive if commercials didn't tell you so?

The off-brands found in dollar stores also don't count as status items. Celebrities don't endorse Sheinhardt wigs, so if you buy one, you're simply buying a wig. When purchasing a brand associated with status -- say, a Nike golf shirt like the one Tiger Woods wore at the last tournament he played -- you've got yourself a shirt, with the added benefit of people assuming you're athletic or wealthy because they saw Tiger wearing the same shirt [source: Wilson].

­To keep prices low, dollar stores sell brands that don't pay for the added overhead of national advertising. This doesn't mean dollar stores can't compete. As time and market cycles march on, dollar stores are guaranteed the last laugh. See why on the next page.