• by Boredlisted

Why higher-income Americans are flocking to dollar stores

To get a better sense of how Americans are dealing with the ongoing economic uncertainty, one simple yet revealing way is to observe the surge in dollar stores across the country.

Sales at both Dollar Tree and Dollar General increased in the latest quarter, driven by higher-income shoppers switching to more affordable options.

“While sales growth was strong across all income cohorts, we continue to see especially strong performance from middle- and higher-income customer,” Dollar Tree CEO Mike Creedon told investors on the company’s earnings call Wednesday.

Dollar Tree said customers with a salary of more than $100,000 made up two-thirds of its new customers in the second quarter, up from 50% in the first quarter. Same-store sales grew 6.5% at the retailer during the quarter.

Strength in electronics, hardware, lawn and garden, and food led to the same increase, while Dollar Tree also expanded its multi-price strategy with price points like $1.35, $3, and $5 home decor items. Dollar Tree stock fell 8% following its results, though its stock is still up 35% this year. Dollar General shares have gained closer to 45% in 2025.

At Dollar General, same-store sales increased 2.8% in the second quarter, driven by an increase in both foot traffic and average basket size, with strength across food, seasonal, home, and apparel categories.

Its CEO, Todd Vasos, called its customer as “resilient” on a call with investors, adding that shoppers have a strong focus on value.

“I would characterize the customer ... [as] seeking value, we’re seeing that in all cohorts of customers, meaning our core customer, mid- and high-end customers, [are] all seeking value at this point,” Vasos said. “Our trade-in has been accelerating over the last few quarters. We saw that again coming into and out of Q2, and what we’re seeing from the customer is a good start to Q3.”

“Trade-in” is what the company calls higher-income shoppers swapping out dollars spent at higher-cost retailer for those spent at Dollar General.

Vasos also noted that its core, the low-income customer segment “increased spending despite worsening sentiment.”

Still, that backdrop for the lowest earners has only grown more challenging as tariffs threaten to push costs higher and the labor market continues to show signs of softening.

“[The] lower-income quintile, they are employed, as are the upper middle and upper, but inflation has weighed on them a little bit more, and that's an ongoing issue,” Goldman Sachs US retail analyst in global investment research Kate McShane said.

McShane said that pressure could deepen on an income basis as low-income consumers deal with cutbacks in Medicaid and SNAP benefits.

The fastest income growth will likely be seen among the middle-income consumers who are positioned to benefit from the SALT tax deductions and no more tax on tips, she added.

“We're seeing lower-income households be a lot more challenged,” said Mark Matthews, National Retail Federation chief economist and executive director of research.

In Matthews's view, that has led to higher-income households “growing as a larger and larger part of the economy,” and, in turn, “driving more of the spending in the retail economy.”