Higher-Income Shoppers Flock to Dollar Stores: A Warning for the US Economy

By: Sayan

Published on: Jun 05, 2025

Dollar Tree Sees More Shoppers With Incomes Above $100K

Dollar Tree CEO Michael Creedon recently reported a significant rise in customers with household incomes exceeding $100,000. According to Creedon, “Higher-income customers have been a meaningful growth driver for us.” In the first quarter, Dollar Tree’s same-store sales climbed 5.4%, with gains recorded across all income brackets. This expansion underscores how even wealthier households are now seeking lower-priced goods amid rising living costs and tariff-driven price increases.

Dollar General Records Highest Trade-In Activity in Four Years

Earlier this week, Dollar General revealed it saw “the highest percent of trade-in customers” in the last four years during Q1. CEO Todd Vasos explained that middle- and high-income consumers—who typically shop at mid- to upper-tier retailers—are now turning to Dollar General. As a result, same-store sales grew 3.4% for the quarter. Data from Placer.ai indicates foot traffic at both Dollar Tree and Dollar General surged in April as new US tariffs took effect.

Trade Policy’s Impact on Consumer Behavior

Evolving trade policies have created economic anxiety for both households and businesses. A recent report from ADP showed US private payroll growth slowed significantly in May. “The weak numbers we’re seeing now do not point to a labor market that’s collapsing, but there is hiring hesitancy,” said ADP chief economist Nela Richardson. At the same time, consumer confidence has dipped in recent months—although May did see a modest uptick. According to PwC’s Ali Furman, while consumers are demonstrating “some resilience,” they are making more “discerning purchases,” opting for retailers that offer greater value.

Why Dollar Stores Thrive in a Slowing Economy

Discount retailers like Dollar Tree and Dollar General traditionally outperform when the economy weakens. When inflation hit four-decade highs in 2022, both companies’ stocks surged: Dollar Tree shares peaked in April 2022, and Dollar General shares topped out in November of that year. In 2025, year-to-date performance shows Dollar General shares up 45% and Dollar Tree up 18%, outpacing the S&P 500’s 1.8% gain as well as larger rivals such as Walmart (+11%) and Target (–30%).

However, over the past 12 months, both dollar store giants underperformed, with shares down over 20%—a reminder that short-term volatility persists.

Tariffs Drive Revenues but Squeeze Margins

While tariff uncertainty may be drawing more customers through the doors, it is also squeezing profitability. On Wednesday, Dollar Tree stock tumbled as much as 10% after the company announced a hit to second-quarter earnings. Dollar Tree now expects Q2 adjusted earnings to fall by up to 50% compared to a year ago, before rebounding in Q3 and Q4. This guidance reflects rising costs from tariffs and the sale of Family Dollar.

Dollar Tree’s Q1 filing shows direct imports account for 41%–43% of total retail value purchases, with China as the primary supplier. CFO Stewart Glendinning noted, “Inventory increased 10%, or $247 million, to $2.7 billion as we expanded our multi-price assortment.” When asked about China’s importance during the earnings call, CEO Creedon reaffirmed, “Global sourcing is critical.” As tariffs push up input costs, dollar stores face a delicate balance: attracting price-sensitive consumers while managing margin pressure.

What This Means for the US Economy

The growing presence of higher-income shoppers in dollar stores underscores widespread consumer caution. Even households earning six figures are tightening spending and seeking value. Combined with slowing payroll growth, wavering consumer confidence, and persistent inflation, this behavior signals potential headwinds ahead. Analysts will be watching trade policy developments, employment reports, and consumer surveys closely to see if this trend persists. For now, dollar stores remain a bellwether for economic stress, showing that when even affluent shoppers trade down, broader uncertainty may lie ahead.