Shares of Dollar General Corp. and its smaller rival Dollar Tree Inc. were lower Tuesday in a continuation of the trend seen since they reported weaker-than-expected second-quarter earnings.
The two discounters should be doing well in the current uncertain climate. Instead, they have struggled along with their stocks as consumers hit by high inflation have become careful about how they spend money and are shopping at more stores and more frequently to seek out bargains. For more, read: Dollar General’s stock tumbles after retailer misses earnings estimates and lowers guidance
UBS analysts highlighted another potential challenge facing hardline retailers in the U.S. on Tuesday, namely the threat from Chinese players Temu, Shein and even TikTok. retailers like Walmart WMT, -0.06%, Target TGT, +0.96%, Dollar Tree, and Dollar General heavily index to consumables as a means to drive traffic,” said the note.But the emerging players offer “a very enticing value proposition,” said the note. Temu and Shein in particular are very competitive in fast fashion and apparel, and offer products that are priced way below their brick-and-mortar counterparts.
The survey found that consumers are most likely to shift spending away from Walmart and Target, followed by Dollar Tree, Family Dollar and Five Below . Whether that proves to be a temporary trial depends on how satisfactory the experience is.