No. of Recommendations: 6
Temu actually did a decent job for low-price items and small purchase for free delivery. No exactly the same, but more fun and cheap. But one needs a smart phone or tablet to use Temu which a small portion of DG clienteles might not have?
For me, the thing to realize is that the delivery costs are big and real, and probably rising.
Somebody has to pay for it, somehow, even if it seems "free" to the buyer.
So, if it doesn't make economic sense (because the delivery cost is higher than the value of the goods, or higher than the margin on the goods), it will never be the main way things get done.
And shouldn't be.
I think the great majority of dollar store customers have smart phones.
It's just a different kind of shopping which is done in person, and a lot of it (once in the store) on impulse.
The quart of milk, the buck for the kid "go find something for yourself", the treasure hunter, the stuff you need right now.
Of course that sounds a lot like stubborn denial of a threat, but I think that if the on-line folks were a big problem it would have shown up by now.
I think I mentioned somewhere that one thing I like about dollar stores as an investment is that they are wonderful for those who like to trade.
They go in and out of fashion far more often than their steady economic characteristics would warrant. DG seems to be at the cheap end of the cycle right now, but that's no reason to think Mr Market is any more right this time than last time.
Pre-market: S&P futures down, DG up, Yahoo Finance headline "Why discount retailers are 'en vogue' right now".
I think an upswing will come soon enough.
Jim
