Tuesday, December 23, 2008

End of the dollar store

I am fascinated by the idea of the dollar store. It would not have occurred to me that there would be so many products that one could sell for just $1. Some of the items really do cost a dollar (in other stores); many of them normally cost more, but the ones in a dollar store are junk. There are, however, some really good buys as well. I bought my kids some composition notebooks there; I couldn't even find them in other stores (because it was around the time school started), but there were plenty in the dollar store, and they seem just as good as far as I can tell. One year I also got a little soap dish with decorative soap that I gave out as gifts to people in the office. It is amazing to think that they can sell items for such a small amount and still be profitable. Not only that, but many of them seem to be located in malls, which I would assume means a higher than usual rent that they have to meet.

The thing with dollar stores is that you'd have to think eventually inflation would catch up with them. They've been around for years, and in fact there seem to be more than ever (there are at least three different chains of them around here), but clearly they cannot last indefinitely — and at our usual rate of inflation, I would be surprised if they could last much over ten years. They've already beaten that record, but I think the end is coming: today I went in a dollar store that had aisles with items for $1.10 and for $2. Since I know that this store formerly had everything for a dollar, I figure other dollar stores will be facing the same pressures.

I presume that these stores can continue to operate selling things very cheaply, rather than for precisely $1, but it does seem to take away their major draw. There doesn't seem to be another obvious point around which to base a price theme; is anyone going to be drawn to a "two-dollar" store? Maybe $5, but we are many years from when that will seem as cheap as $1 does now. I wonder about the old five-and-dime stores. Did they really sell everything for 5 or 10 cents? If so, what did they do when prices went up? Was there ever a quarter store? If there were stores like that, they must have died out at some point; will the same thing happen to dollar stores?

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