What's Making Dollar Stores So Popular?

NATIONAL REPORT -- Why are dollar stores growing at a much faster clip than Walmart, which is also known to be a low-cost product provider? The answer, according to ITG Investment Research analyst John Tomlinson is that consumers are so broke and busy, they can't afford the gas and time required to shop at big-box discounters, which are often located on the edge of towns.

Tomlinson told SmartMoney that the typical dollar store is "close to home and one tenth the size of your average Walmart. Most shoppers spend just 10 minutes and 10 bucks in the store. In 2012, this is how we prefer to shop."

Dollar store chain Dollar General is the No. 1 retailer in the United States as far as store count is concerned. The chain, which already has 9,800 locations, has said it plans to double its store count over the next few years.

Dollar General, as well as competitors such as Family Dollar and Dollar Tree, have been growing exponentially recently. Although the continued poor economic environment is one reason, it isn't the only factor, the news outlet stated.

The SmartMoney report noted that 75 percent of Dollar General's merchandise actually costs more than $1, and dollar stores are not known for incredible closeout deals.

Manufacturers have clearly taken notice of dollar stores' growth. Although the channel used to be known for primarily selling overstock and closeout items, companies like Procter & Gamble are making products in small sizes designed exclusively to fit dollar store shelves, the news outlet reported.