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|
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.
Mapped: The Salary Needed to Buy a Home in 50 U.S. Metro Areas
The annual salary needed to buy a home in the U.S. ranges from $38k to $255k, depending on the metropolitan area you are looking in.
The Salary Needed to Buy a Home in 50 U.S. Metro Areas
Over the last year, home prices have risen in 49 of the biggest 50 metro areas in the United States.
At the same time, mortgage rates have hit seven-year highs, making things more expensive for any prospective home buyer.
With this context in mind, today’s map comes from HowMuch.net, and it shows the salary needed to buy a home in the 50 largest U.S. metro areas.
The Least and Most Expensive Metro Areas
As a reference point, the median home in the United States costs about $257,600, according to the National Association of Realtors.
|Median Home Price||Montly Payment (PITI)||Salary Needed|
With a 20% down payment and a 4.90% mortgage rate, and taking into account what’s needed to pay principal, interest, taxes, and insurance (PITI) on the home, it would mean a prospective buyer would need to have $61,453.51 in salary to afford such a purchase.
However, based on your frame of reference, this national estimate may seem extremely low or quite high. That’s because the salary required to buy in different major cities in the U.S. can fall anywhere between $37,659 to $254,835.
The 10 Cheapest Metro Areas
Here are the cheapest metro areas in the U.S., based on data and calculations from HSH.com:
|Rank||Metro Area||Median Home Price||Monthly Payment (PITI)||Salary Needed|
After the dust settles, Pittsburgh ranks as the cheapest metro area in the U.S. to buy a home. According to these calculations, buying a median home in Pittsburgh – which includes the surrounding metro area – requires an annual income of less than $40,000 to buy.
Just missing the list was Detroit, where a salary of $48,002.89 is needed.
The 10 Most Expensive Metro Areas
Now, here are the priciest markets in the country, also based on data from HSH.com:
|Rank||Metro Area||Median Home Price||Monthly Payment (PITI)||Salary Needed|
|#6||New York City||$403,900||$2,465.97||$105,684.33|
Topping the list of the most expensive metro areas are San Jose and San Francisco, which are both cities fueled by the economic boom in Silicon Valley. Meanwhile, two other major metro areas in California, Los Angeles and San Diego, are not far behind.
New York City only ranks in sixth here, though it is worth noting that the NYC metro area extends well beyond the five boroughs. It includes Newark, Jersey City, and many nearby counties as well.
As a final point, it’s worth mentioning that all cities here (with the exception of Denver) are in coastal states.
Notes on Calculations
Data on median home prices comes from the National Association of Realtors and is based on 2018 Q4 information, while national mortgage rate data is derived from weekly surveys by Freddie Mac and the Mortgage Bankers Association of America for 30-year fixed rate mortgages.
Calculations include tax and homeowners insurance costs to determine the annual salary it takes to afford the base cost of owning a home (principal, interest, property tax and homeowner’s insurance, or PITI) in the nation’s 50 largest metropolitan areas.
Standard 28% “front-end” debt ratios and a 20% down payments subtracted from the median-home-price data are used to arrive at these figures.
How Decentralized Finance Could Make Investing More Accessible
Under the current global financial system, billions of people do not have access to quality assets. Here’s how decentralized finance is changing that.
Infographic: How Decentralized Finance Could Make Investing More Accessible
Did you know that a majority of the global population doesn’t have access to quality financial assets?
In advanced economies, we are lucky to have simple options to grow and protect our wealth. Banks are all over the place, markets are robust, and we can invest our money into assets like stocks or bonds at the drop of a hat.
In the United States, roughly 52% of people are invested in the stock market – but in a place like India, for example, this portion drops to a paltry 2%. How can we make it possible for people on the “outside” of the financial system to gain access?
Breaking Down Barriers
Today’s infographic comes to us from Abra, and it shows how decentralized finance could make investing a more universal phenomenon, especially for those that don’t have access to the modern financial system.
It lays out four key obstacles that prevent people in developing markets from investing in quality financial assets in the first place:
- The Geographic Lottery
Where you live plays a massive role in determining your ability to build wealth. In advanced Western economies, the average person is much more likely to be invested in financial markets that can help compound wealth.
- Financial Literacy and Complexity
Roughly 3.5 billion adults globally lack an understanding of basic financial concepts, which creates an impenetrable barrier to investing.
- Local Market Turmoil
Even if a person is mentally prepared to invest, local market turmoil (hyperinflation, political crises, closed borders, etc.) can make it difficult to get access to stable assets.
- The Cost of Investing in Foreign Markets
Foreign assets can be pricey. One share of Amazon is $1,800, which is realistically more money than many people around the world can afford.
In other words, there are billions of people globally that can’t take advantage of some of the most effective wealth-building tactics.
This is just one flaw in the current financial system, a paradigm that has created massive amounts of wealth but only for a specific and well-connected group of people.
Enter Decentralized Finance
Could decentralized finance be the alternative to open up access to financial markets?
By combining apps with blockchain technology – specifically through public blockchains such as Bitcoin or Ethereum – decentralized finance makes it possible to get around some of the barriers that are created by more traditional systems.
Here are some of the innovations that are making this possible:
Smart contracts could automate transactions and remove intermediaries, making investing cheaper, faster, and more accessible.
Fractional investing could allow partial or shared ownership of financial assets by using tokenization. This would make expensive stocks like Amazon ($1,800 per share) available to a much wider segment of the population.
Location independent investing is possible through smartphones. This would make it possible for people in remote parts of the developing world to invest, even without access to nearby financial institutions or local markets.
Like the internet with knowledge, decentralized finance could reshape the world by making financial access universal. Who’s ready?
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