The Sneaky Reason Dollar Stores Are So Small

It's not easy to be a frugal shopper. Playing the savings game is a long game, and it can be a total drag. Long hours of always making sure to check unit-pricing numbers when buying groceries to constantly cultivating endless other creative grocery shopping strategies to save money take an energetic toll on even the most savvy shoppers. That's why many pennywise patrons, and even those of bulk-savings superstores like Costco and Sam's Club (really, which membership is better between the two?) may feel a flood of retail relief when they roll into a rather pint-sized discount dealer: the dollar store.

These small-format, small-footprint stores are packed with rows of affordable goods that dazzle the eye, priced so low that they seemingly won't break the budget. Cramped aisles stuffed with steeply discounted seasonal décor, shelf-stable grocery items, cleaning supplies, and home and personal goods may just have shoppers feeling the urge to dump half the dollar store in their half-size carts. Indeed, there's something about a dollar store that can make even the most frugal shoppers feel like they're on a shopping spree. That feeling doesn't come by accident, of course. There's a sneaky reason behind the small-but-mighty size of most dollar stores, and it's to make more dollars off of you, and to save on dollar-store operations.

The average dollar store is a fraction of the size of a standard retailer. For example, the average Dollar General is about 7,500 square feet, compared to the average Target store size of 125,000 feet. Unlike larger retail chains, dollar stores tend to take over spaces in vacant lots and storefronts. One reason dollar stores are so small is because the companies that run stores like Dollar General, Dollar Tree, and Family Dollar are trying to fill a gap in the market — or even exploit it.

Dollar stores tend to corner their markets using expansion and proliferation, often across resource-strapped rural and urban areas. Even though dollar stores have started catering to higher-income shoppers and a variety of frugal shoppers tap into the deals these stores provide, a core low-income clientele relies on dollar store pricing for goods and supplies. The blessing (and the curse) of the dollar store is that the companies that run them are happy to take over seemingly as many storefronts as possible, even when their overall business models don't seem equipped to support it.

Taking over already established storefronts with a small physical footprint doesn't only help dollar stores up their market share, though. Small spaces also save big on operating costs. Next time you're shopping in a small dollar store, note how many staff are on the sales floor. Usually, a small part-time staff rotates hours at the store, while only one or two salaried managerial staff are employed.

Ever have your head turned by the items stocked in the checkout aisle? Honestly, you may not need a pack of light-up glitter gel pens or birthday cake-flavored gum, but because they're right there when you're checking out, they might end up in your bag. The small-format dollar store plays into this impulse-purchase mentality. Food and popular items tend to be stocked in the back of these small stores, with other fun goods like home décor, books, and party and art supplies requiring you to walk by them on your way to what you need.

Consider the entire dollar store an impulse aisle, wrapping around you as you just try to pick up some inexpensive toothpaste and deodorant. You may easily walk into the dollar store wanting a small amount of goods, and come out with a cart full of treasures — or fool's gold, depending on the budget you're on.

There's one more small-but-mighty sneaky way dollar stores squeeze profits out of their customers: selling products that are actually smaller than they should be. Dollar stores are big perpetrators of shrinkflation, and often sell products for seemingly low prices, and somewhat smaller sizes than they would be at a full-price retailer. It's a perhaps stark reminder that even though dollar stores can be a lifesaver or a fun place to get certain supplies, in the long run, smart shoppers might stretch their dollar further by checking unit prices and comparison shopping elsewhere.