Almighty dollar stores

Michael Moylan's shopping cart is filled with paper towels, soft drinks, fabric freshener and fly swatters.

But he's bypassing conventional supermarkets and big-box discount stores for the modern-day equivalent of the five-and-dime. The Goose Creek resident chooses Dollar General for most of his shopping.

"It's cheap, and it's convenient," said Moylan, who works in North Charleston as a propmaker for the Lifetime TV series "Army Wives."

The products he was buying at the store on Dorchester Road were meant for the series' construction crew, but he also purchases products for his personal use at the Dollar General in Goose Creek.

"It's just cheaper," he said. "I always shop here."

Low prices and easy access are driving cash-strapped consumers into dollar stores and fueling a boom for that no-frills sector of the retail industry.

For instance, Matthews, N.C.-based Family Dollar, which is celebrating its 50th anniversary, reported a 33 percent jump in its last quarterly earnings that ended in February and was the top performer of the S&P 500 in 2008.

Sales of nearly $2 billion for the quarter were 8.7 percent higher than the same period in 2008. The company's third-quarter earnings from its nearly 6,700 stores are due out this week and are expected to build on its growing popularity.

"Thrift is in," Family Dollar spokesman Josh Braverman said. "Folks are looking to save a dollar wherever they can. People are learning they can get name-brand products at a low price at Family Dollar rather than paying a premium at the grocery store."

Target market

Family Dollar targets namely female heads of households with incomes of $40,000, Braverman said.

The company's research shows that shoppers in the $50,000-income bracket have traded down to help boost sales, but that core customers are coming in more often and buying more products.

People are mainly buying food, cleaning supplies and seasonal items such as beach towels more so than apparel and home goods during hard times, Braverman said.

When times improve, he said, the company historically does better because people start to buy discretionary goods as well as items of necessity.

"I don't think we are recession-proof, but we are recession resistant," Braverman said.

Driving Family Dollar's growth is the addition of 200 new food products from Kraft salad dressing to Jif Peanut Butter and Double Stuf Oreo Cookies.

"We aren't a destination grocery store," he said. "We strive to be that quick fill-in trip for all of our customers. It's for the mother who just picked up her kids from school and says, 'I'm out of milk or bread for tomorrow,' so she might run in and say, 'There's a beach towel I need, too.' "

Floretta Jones of West Ashley was clutching a hand-held basket of bargains at the Family Dollar on Savannah Highway.

"I can buy things here that I need at a reasonable price," Jones said. "You tend to go where you can save money."

Down the aisle, retired nurse Naomi Glover flipped through a fistful of coupons for one for tissue paper.

"It's cheap," she said of Family Dollar's prices after finding an ironing board cover for $5.

She and Jones each hailed easy access to the dollar stores as well.

"You can park right in front of the door and walk right in," Jones said.

Bottom line

At Dollar General, sales jumped 15.7 percent for the first quarter that ended May 1, putting an exclamation point on buyers' spending habits of looking for a bargain in hard economic times. The soaring sales are on top of a 5.4 percent increase for the same quarter in 2008.

More customers and more spending by each per visit contributed to Dollar General's surge, company officials said.

"Our loyal customers are shopping with us more often, and we believe that we are also attracting new customers," said Rick Dreiling, Dollar General chairman and CEO.

Dollar General spokeswoman Tawn Earnest said the company's business model is so strong that it has reported positive same-store sales for 19 consecutive years, and the company was well-positioned going into the nation's economic slumber.

"Our stores are relevant to customers now more than ever," Earnest said. "Shoppers are looking for value and convenience. No one wants to pay more than they have to for basic needs."

On top of its surging sales, the Goodlettsville, Tenn.-based chain of 8,462 stores announced in April it will create 4,000 jobs through next January and open 450 new stores. It has 25 stores in the greater Charleston area and plans to open four new stores this year in Bonneau, McClellanville, Moncks Corner and Summerville, Earnest said.

Family Dollar, on the other hand, plans to open 200 stores through its fiscal year that ends in August. Its newest store among the Charleston area's 26 locations opened in January on Ladson Road. It said it will announce its new-stores count for fiscal 2010 in October.

Competitor Dollar Tree, which sells everything for $1 or less at its 3,667 stores, including eight in the Charleston region, also posted hefty gains during its first quarter earnings report released last month. Total sales climbed 14.2 percent, and comparable store sales jumped 9.2 percent for the Chesapeake, Va.-based discount retailer. Sales were so good, they exceeded expectations by $40 million, according to the company's earnings report.

"Our traffic continues to grow as more and more customers rely on Dollar Tree's extreme value for everyday needs and special occasions," said Dollar Tree President and CEO Bob Sasser.

Back at Dollar General, baby sitter Lesha Pelfry pushes a cartload of milk, soft drinks, detergent, air freshener, scrub brush and many name-brand items and instantly gives the bottom-line assessment about dollar stores' popularity in these tough times.

"They're less expensive," she said.

Reach Warren Wise at 937-5524 or wwise@postandcourier.com.