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Walmart Trying to Dethrone Dollar Store Chains

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  • Walmart national branded consumables prices are 4.4% less than Dollar General
  • Black people spend nearly $830 million a year on detergent

Walmart (WMT -1.01%) is gearing up for another battle to win over low-end consumers through a new pricing strategy. The front lines of this war will play out in minority communities across the country, as they battle chains like Big Lots (BIG -0.24%), Dollar General (DG +0.70%) and Family Dollar. Just how valuable is the black consumer’s dollar for the budget friendly chains Walmart is trying to dethrone?

Why This Matters: When it comes to spending power African Americans make up 14% of the U.S. population but have outsized influence in this arena. Financial firm Raymond James put out a note highlighting the price impact Walmart has on other discount chains, which happen to have a large black shopper demographic. “Walmart pricing for national branded consumables, which includes laundry detergent and cereal is now 4.4% lower compared to Dollar General and 6.5% below Family Dollar,” the note said.

If we look at the power of the black dollar across these same consumables, black people spend nearly $830 million a year on detergent and more than $573 million on personal soap and bath needs, according to Nielsen. It’s not just low income shoppers that frequent these dollar stores. Customers with household incomes of more than $70,000 claim they also shop at dollar store chains.

Situational Awareness: Dollar stores remain profitable and tend to thrive in areas of low-income earners where Walmart is vying for a larger market share. In general the retail sector has been hit hard with most companies facing declining stock prices. Walmart shares are down 12% for the year so far, while Big Lots shares are down nearly 24% for the same period and Dollar Tree (DLTR -0.05%) is down 9%. It would seem as though the black retail dollar is going to become more sought after for all of these stores as they try to push their stock prices higher.

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