Small packs big in US retail scene

As Americans continue to tighten budgets amidst their country’s economic woes, retailers have had to sit up and take note of the once-ignored low-end customer.

Dollar stores — known for selling goods in small, affordable packages typically priced under a dollar — have shown the biggest gain in shopper visits over the last year out of all the retailers that sell basic consumer goods, according to market research data. Now other retailers are trying to duplicate their success.

Wal-Mart, the world’s largest retailer, is adding thousands of items to its shelves, including inexpensive ones, and is asking dollar-store suppliers to create small, under-a-dollar packages for its stores, too. In areas with high unemployment, Wal-Mart is grouping together its less-than-$1 items in a clear challenge to the dollar stores.

“People are literally running out of cash on hand as the month goes on and they’re looking for smaller package sizes,” said Craig Johnson, president of the retail consulting and research firm Customer Growth Partners. “They may have $10, $20, $30 to spend getting toward the end of the month, and they have to be able to still feed the family and get diapers and so forth.”

“Because of their cash flow, they’re buying the smaller packs,” said Sam Paul, CEO of Nextep, which makes trash bags. NYT