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TheStreet Open House

U.S. Has More Dollar Stores Than Drugstores

Stocks in this article: WMTTGTWAGCVSFDODGDLTR

NEW YORK ( MainStreet) -- Dollar stores are taking over the nation.

According to a report from real estate services company Colliers International, the four big national chains -- Dollar General (DG), Dollar Tree (DLRT), Family Dollar (FDO) and 99 Cents Only Stores (NDN) -- operate approximately 21,500 locations in the U.S.

Dollar stores are taking over the U.S., now operating more units than the major drugstores.

That combined total surpasses that of the nation's three biggest drugstore chains: Walgreens (WAG), CVS (CVS) and Rite Aid (RAD), which collectively operate 19,700 locations.

The report concludes that the recession led consumers to visit dollar stores in lieu of drugstores, supermarkets and gas stations since their prices were much lower. The dollar store chains are also able to fill a void in smaller markets, since big box stores such as Wal-Mart (WMT) and Target (TGT) typically carry "onerous real estate requirements."

The average dollar store occupies a footprint of 7,000 to 10,000 square feet, although the report notes that some prototypes are larger (around 20,000 square feet). Wal-Mart and Target stores, comparatively, range from 120,000 to 250,000 square feet, the report says.

The dollar store onslaught is expected to continue, according to Colliers, with the four major chains adding units in 2012.

"The convenience they provide -- bringing better products at lower prices closer to the consumer -- helps dollar stores better serve existing customers and attract new ones," Ann Natunewicz, national manager of U.S. retail research for Colliers International, said in a press release. "Retail is habit-forming; the longer shoppers patronize a particular store or category, the more likely it is to become a permanent shopping destination."

What do you need to know before hitting up your local dollar store? Find out in our article on how to shop a 99-cent store.

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