Dollar Stores Increase Local Presence, Raise Prices

A number of new dollar stores have popped up around Sheepshead Bay, but they’re also raising prices as the economic downturn expands their customer base.

A new 99 cent store on Nostrand Avenue near Avenue X comes on the heels of the opening of another dollar store on Ocean Avenue and Avenue Z, which itself came after an expansion of another store on Nostrand Avenue.

But the openings aren’t some local phenomenon; they mirror a national trend of multiplying dollar store locations capitalizing on the recession. According to Daily Finance, the chain dollar stores are luring away shoppers from retail powerhouses like Walmart, and showing some of the strongest stock prices.

Chains such as Dollar Tree (DLTR), Family Dollar Stores (FDO) and Dollar General (DG) are hitting the world’s largest retailer where it hurts — in the food and pharmacy aisles. The rock-bottom discounters are revamping their stores and replacing no-name products with nationally known brands, luring in both the low-income shoppers who have been Walmart’s core customers and higher-income households getting thriftier in hard times.

Locally, dollar stores are looking at the surge in shoppers as an opportunity to expand stock and raise prices. Jonah’s 99 Cent Store at 1644 Sheepshead Bay Road has been selling larger items for more than a buck for years, but they’ve lately expanded on those offerings. Closer to the train station, Sheepshead Bay Road’s other 99 cent store has also started offering items that previously cost no more than its namesake, especially on pharmacy items like deodorant that Daily Finance pinned as best-sellers.

The story is the same at buck businesses all over the neighborhood.

In our neck of the woods, the penny-pincher’s paradise has always been the 99 Cents The Limit store on Coney Island Avenue and Avenue Z. The large storefront, complete with parking lot and a wide assortment of food items, has been drawing customers from all over Southern Brooklyn for years by keeping to its promise of items priced no more than 99 cents.

But, according to one upset reader, that’s no longer the case. He writes:

The 99 cents store on Avenue Z and Coney Island needs to change its name. They call themselves 99 Cents The Limit. Yet now they’ve introduced a lot of products priced at $1.49 and $1.99. While some of these items are new product and perhaps a little better some are as close or a match for things they’ve sold for 99 cents before. I don’t know how many customers they’ll lose but I have to wonder how many people are going to drive all the way to a place where they won’t be saving as much as they did before. Some customers I spoke to in there seemed to be passively accepting the change. But in this “Great Recession” the place was a paradise for those on a tight budget.

Though the prices are increasing, they’re still much lower than competitors selling similar items like CVS and Stop & Shop. Still, it appears that the “99 Cent” branding will soon be an anachronism as these businesses begin to flex their retail muscle.

The question is, as item prices continue to rise, at what point will they stop being called dollar stores, and will they still draw shoppers?