Markets
Discount Domination: Dollar Stores are Thriving in America
The retail landscape is in a constant state of flux.
E-commerce is indisputably disrupting almost every imaginable aspect of retail, creating what has been coined as the “retail apocalypse”. As a result, certain segments of the market have had well publicized meltdowns – electronics and apparel, in particular – and the U.S. now has far more retail floor space available than any other nation.
That said, there is one type of store that’s thriving in this unpredictable landscape – dollar stores. Today, we examine data from the Institute of Local Self-Reliance, which puts the scale of the United States’ dollar store boom into perspective.
Escaping the Retail Apocalypse
The rise of e-commerce giants like Amazon has led to a relentless wave of closures for brick and mortar retailers. Department stores and consumer electronics are taking hard hits, yet a curious trend emerges through the cracks – dollar stores are multiplying like rabbits.
The persistent growth of dollar stores is the biggest retail trend in the past decade. Between 2007 and 2017, over 11,000 new dollar stores were opened; that’s roughly 93 new stores a month, or three per day. Dollar General, in particular, is reaping the rewards: the company has a market cap of over $30 billion.
Compared to mammoth retailer Walmart, Dollar General is the little store that could. Despite reporting lower sales per square foot, Dollar General outperforms Walmart in 5-year gross profit margins.
Store | Sales per square foot | 5-year gross profit margins | Cost of a new store |
---|---|---|---|
Dollar General | $184 | 30.9% | $250,000 |
Walmart | $432 | 25.1% | $15,000,000 |
Sources: Bloomberg, E-Marketer
This whopping difference in launching a new location contributes to the fast and furious spread of dollar stores. Dollar General and Dollar Tree (which now owns Family Dollar) boast 30,000 stores between them, eclipsing the six biggest U.S. retailers combined. Their combined annual sales also rival Apple Stores, including iTunes.
The Dollar Store Strategy
What makes dollar stores so lucrative? In a nutshell, they’re willing to go where others won’t.
Dollar General focuses on rural areas, while Dollar Tree and Family Dollar are more prominent in urban and suburban areas. But they have one thing in common – all three chains target small towns in rural America, resulting in a high concentration per capita, especially in the South.
Wal-Mart’s 40 miles away and we can meet those people’s needs.
– David Perdue, Former CEO of Dollar General
Dollar General’s ambitious expansion into smaller towns has proven successful. Residents can find many everyday products at prices similar to those at Walmart, but without the longer drive to a Supercenter. Despite the 3,500 Walmart Supercenters spread out across the country, chances are, there’s a dollar store even closer.
Dollar stores fill a need in cash-strapped communities, saving time and gas money during a trip to the store, and then offering an affordable and enticing products inside the store itself.
America’s Grocery Gap
The no-frills shopping experience is also a quintessential trait of dollar stores. Dollar stores focus on a limited selection of private label goods, selling basics in small quantities instead of bulk.
However, there’s also a dark underbelly to this trend. Dollar stores often enter areas with no grocery stores at all, called food deserts. In the absence of choice, dollar stores are welcomed with open arms – but the lack of fresh produce and abundance of processed, packaged foods leave much to be desired.
If you live in Whole Foods-land – not the dollar store world – it’s an invisible reality that they’re supplying a lot of the groceries.
— Stacy Mitchell, Institute for Local Self-Reliance
On the other hand, when dollar stores compete with locally-owned grocery stores in the same area, sales in the latter can be cut by over 30% in some cases – taking an enormous toll on the community.
The ILSR report suggests that dollar stores may not always be a by-product of economic distress, but a cause of it. Regardless of what perspective you have on the spread of dollar stores, it’s clear they’re here to stay.
Economy
Ranked: The World’s 50 Top Countries by GDP, by Sector Breakdown
This graphic shows GDP by country, broken down into three main sectors: services, industry, and agriculture.

Visualized: The Three Pillars of GDP, by Country
Over the last several decades, the service sector has fueled the economic activity of the world’s largest countries. Driving this trend has been changes in consumption, the easing of trade barriers, and rapid advancements in tech.
We can see this in the gross domestic product (GDP) breakdown of each country, which gets divided into three broad sectors: services, industry, and agriculture.
The above graphic from Pranav Gavali shows GDP by country, and how each sector contributes to an economy’s output, with data from the World Bank.
Drivers of GDP, by Country
As the most important and fastest growing component of GDP, services make up almost 60% of GDP in the world’s 50 largest countries. Following this is the industrial sector which includes the production of raw goods.
Below, we show how each sector contributes to GDP by country as of 2021:
Country | Services (% GDP) | Industry (% GDP) | Agriculture (% GDP) | Other (% GDP) | GDP (T) |
---|---|---|---|---|---|
🇺🇸 U.S. | 77.6 | 17.9 | 1.0 | 3.6 | $22.9 |
🇨🇳 China | 53.5 | 39.3 | 7.2 | 0.0 | $16.9 |
🇯🇵 Japan | 69.9 | 28.8 | 1.0 | 0.4 | $5.1 |
🇩🇪 Germany | 62.9 | 26.7 | 0.9 | 9.5 | $4.2 |
🇬🇧 UK | 71.6 | 17.3 | 0.7 | 10.4 | $3.1 |
🇫🇷 France | 70.3 | 16.7 | 1.6 | 11.4 | $2.9 |
🇮🇳 India | 47.9 | 26.1 | 17.3 | 8.7 | $2.9 |
🇮🇹 Italy | 65.0 | 22.7 | 1.9 | 10.4 | $2.1 |
🇨🇦 Canada* | 67.7 | 24.1 | 1.7 | 6.6 | $2.0 |
🇰🇷 South Korea | 57.0 | 32.4 | 1.8 | 8.8 | $1.8 |
🇧🇷 Brazil | 57.8 | 20.2 | 7.5 | 14.6 | $1.6 |
🇦🇺 Australia | 65.7 | 25.5 | 2.3 | 6.5 | $1.6 |
🇷🇺 Russia | 54.1 | 31.8 | 3.9 | 10.3 | $1.6 |
🇪🇸 Spain | 67.4 | 20.4 | 2.6 | 9.6 | $1.4 |
🇲🇽 Mexico | 59.2 | 30.8 | 3.9 | 6.1 | $1.3 |
🇮🇩 Indonesia | 42.8 | 39.8 | 13.3 | 4.1 | $1.2 |
🇮🇷 Iran | 47.3 | 38.0 | 12.4 | 2.3 | $1.1 |
🇳🇱 Netherlands | 69.4 | 17.9 | 1.5 | 11.2 | $1.0 |
🇨🇭 Switzerland | 71.9 | 24.6 | 0.6 | 2.8 | $0.8 |
🇹🇷 Turkiye | 52.8 | 31.1 | 5.5 | 10.6 | $0.8 |
🇹🇼 Taiwan | 60.6 | 38.0 | 1.5 | 0.0 | $0.8 |
🇸🇦 Saudi Arabia | 46.5 | 44.7 | 2.7 | 6.1 | $0.8 |
🇵🇱 Poland | 56.9 | 27.9 | 2.2 | 13.0 | $0.7 |
🇧🇪 Belgium | 68.8 | 19.6 | 0.7 | 10.9 | $0.6 |
🇸🇪 Sweden | 65.0 | 22.5 | 1.3 | 11.3 | $0.6 |
🇮🇱 Israel | 72.4 | 17.2 | 1.3 | 9.1 | $0.5 |
🇦🇷 Argentina | 52.5 | 23.6 | 7.1 | 16.8 | $0.5 |
🇦🇹 Austria | 62.4 | 25.8 | 1.2 | 10.5 | $0.5 |
🇳🇬 Nigeria | 43.8 | 31.4 | 23.4 | 1.4 | $0.5 |
🇹🇭 Thailand | 56.3 | 35.0 | 8.7 | 0.0 | $0.5 |
🇮🇪 Ireland | 55.4 | 37.8 | 1.0 | 5.8 | $0.5 |
🇭🇰 Hong Kong | 89.7 | 6.0 | 0.1 | 4.3 | $0.4 |
🇩🇰 Denmark | 66.7 | 19.3 | 0.9 | 13.1 | $0.4 |
🇸🇬 Singapore | 70.3 | 24.4 | 0.0 | 5.3 | $0.4 |
🇿🇦 South Africa | 63.0 | 24.5 | 2.5 | 10.0 | $0.4 |
🇵🇭 Philippines | 61.0 | 28.9 | 10.1 | 0.0 | $0.4 |
🇪🇬 Egypt | 52.5 | 31.2 | 11.4 | 4.9 | $0.4 |
🇧🇩 Bangladesh | 51.3 | 33.3 | 11.6 | 3.7 | $0.4 |
🇳🇴 Norway | 51.8 | 36.3 | 1.7 | 10.2 | $0.4 |
🇻🇳 Vietnam | 41.2 | 37.5 | 12.6 | 8.8 | $0.4 |
🇲🇾 Malaysia | 51.6 | 37.8 | 9.6 | 1.1 | $0.4 |
🇦🇪 U.A.E. | 51.6 | 47.5 | 0.9 | 0.0 | $0.4 |
🇵🇰 Pakistan | 52.1 | 18.8 | 22.7 | 6.4 | $0.3 |
🇵🇹 Portugal | 64.7 | 19.6 | 2.2 | 13.5 | $0.3 |
🇫🇮 Finland | 60.3 | 24.1 | 2.3 | 13.4 | $0.3 |
🇨🇴 Colombia | 58.0 | 24.9 | 7.6 | 9.5 | $0.3 |
🇷🇴 Romania | 59.1 | 26.7 | 4.5 | 9.6 | $0.3 |
🇨🇿 Czechia | 58.8 | 30.3 | 1.8 | 9.1 | $0.3 |
🇨🇱 Chile | 54.4 | 31.3 | 3.6 | 10.6 | $0.3 |
🇳🇿 New Zealand* | 65.6 | 20.4 | 5.7 | 8.4 | $0.2 |
Industrial sector includes construction. Agriculture sector includes forestry and fishing. *Data as of 2019.
In the U.S., services make up nearly 78% of GDP. Apart from Hong Kong, it comprises the highest share of GDP across the world’s largest economies. Roughly 80% of American jobs in the private sector are in services, spanning from healthcare and entertainment to finance and logistics.
Like America, a growing share of China’s GDP is from services, contributing to almost 54% of total economic output, up from 44% in 2010. This can be attributed to rising incomes and higher productivity in the sector as the economy has grown and matured, among other factors.
In a departure from the top 10 biggest countries globally, agriculture continues to drive a large portion of India’s GDP. India is the world’s second largest producer of wheat and rice, with agriculture accounting for 44% of the country’s employment.
While the services sector has grown in India, it makes up a greater share in other emerging economies such as Brazil (58%), Mexico (59%), and the Philippines (61%).
Growth Dynamics
Services-led growth has risen faster than manufacturing across many developing nations, underpinned by productivity growth.
This structural shift is seen across economies. In many countries in Africa, for instance, jobs have increasingly moved from agriculture to services and trade, where it now accounts for 42% of jobs.
These growth patterns are supported by rising incomes in developing economies, while innovation in tech is lowering barriers to enabling service growth. As the industrial sector makes up a lower share of trade and economic activity, the service sector is projected to make up 77% of global GDP by 2035.
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