Dollar Tree makes an upscale play to fuel sales

Core Insights - Dollar Tree is strategically opening new stores in affluent areas to attract higher-income customers who tend to spend more per visit [1][6] - The percentage of new Dollar Tree stores in high-income ZIP codes has increased to 19% over the last six years, while those in low-income areas have decreased to 14% [2] - Higher-income households are becoming a significant driver of consumer spending, prompting Dollar Tree to adapt its strategy to appeal to these shoppers [3][10] Store Location Strategy - 49% of new Dollar Tree stores opened in the last six years are in wealthier parts of metro areas, up from 41% in the previous six years [1] - The share of new stores in ZIP codes with significantly higher incomes rose from 16% to 19% in the same timeframe [2] - Conversely, the share of stores opened in lower-income ZIP codes fell from 20% to 14% [2] Customer Demographics - In the last quarter, 60% of new Dollar Tree customers had annual incomes of at least six figures, with 30% being middle-income households earning between $60,000 and $100,000 [6] - Higher-income customers spend an average of $1 more per visit compared to lower-income customers, and an additional visit per year from these customers could increase annual sales by $1 billion [6] Market Trends - Economic downturns typically boost business for dollar stores, but the current strategy focuses on attracting higher-income shoppers who are making more deliberate spending choices [3][7] - The shift in consumer shopping preferences, driven by inflation, has led more households to seek out discount retailers like Dollar Tree [11]