Dollar stores get spruced up; deals less clear

Dollar stores have accelerated their growth by transforming stores with wider aisles, better lighting and more name brands. But their prices still usually are slightly more expensive than Target Corp. or Walmart Stores Inc., said Dutch Fox, an equities analyst for FBR Capital Markets & Co.
By CANDICE CHOI Published: December 16, 2012
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— Ducking into a dollar store to pick up some soda and bag of cookies might save you time and effort, but will you save any money?

Since the start of the downturn, major chains such as Dollar General Corp. and Family Dollar Stores Inc. have accelerated their growth by transforming stores with wider aisles, better lighting and more name brands. The result is that they're shedding their image as depots for misfit merchandise and pulling in a wider range of shoppers.

A big attraction for many is that they can get in and out quickly. Dollar stores are relatively small and not as big a hassle as a trip to the supermarket or a big-box retailer. When it comes to value, the picture is a lot less clear-cut.

Not always cheaper

Although prices tend to be cheaper than drugstores and supermarkets, for example, dollar stores are still usually slightly more expensive than Target Corp. or Walmart Stores Inc., said Dutch Fox, an equities analyst for FBR Capital Markets & Co. But those rules aren't set in stone, either, because prices can fluctuate weekly depending on retailers' promotions.

The dollar store industry itself varies greatly too, with plenty of independent operators and smaller chains selling an assortment of general merchandise jammed into small shops. But the bigger players are expanding quickly; Dollar General, which has 10,300 stores in 40 states, is opening 600 new locations a year. Family Dollar, which has 7,500 locations in 45 states, is opening about 500 a year.

Here's what to expect from the latest versions of dollar stores.

What you'll find

Even though they're revamping their layouts to be more inviting, dollar stores remain defined by their relatively limited selections. That's primarily because they're much smaller than the typical supermarket of about 7,500 square feet, or about three times the size of a typical 7-Eleven store. So don't expect any fresh produce or meat counters.

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