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Published: Friday, 12/23/2011 - Updated: 3 years ago

Dollar stores evolve into favorites for tight budgets

Niche predicted to post strong holiday results


LOS ANGELES — After four years without a job and two years living in a motel in Inglewood, Calif., Jay Payne went Christmas shopping for the first time in a long while.

His children, ages 7, 13, and 15, have asked him for a Nintendo 3DS gaming console and a PlayStation system, gadgets the 37-year-old single father has frantically tried — and failed —to budget for. Mr. Payne, who landed a parking-lot security job this month, hunts for gifts in the few places he can afford: dollar stores.

Dollar stores have evolved into a go-to spot for holiday shoppers on a tight budget or trying to get more value for their money. In contrast with the often dingy spaces they once occupied, many have undergone renovations and are stocked with a bounty of Christmas trees, wrapping paper, toys, and inexpensive electronics for the holiday season. Some even carry steaks.

With the job market and economy still unsettled, dollar stores are predicted to do robustly as shoppers of all incomes flock there to pick up cheap decor and presents.

Although dollar stores have attracted higher-income customers in recent years, the fallout of the nation’s economic downturn has been especially evident in the aisles of these low-cost stores during the holidays.

Several chains, including Dollar General Corp., based in Tennessee, and Family Dollar Stores Inc. of North Carolina operate thousands of stores.

Other retailers say dollar stores don’t necessarily equate to the best value for holiday gifts.

Brian Hanover, a spokesman at Sears Holding Corp., which owns the Sears and Kmart chains, said shoppers may go to dollar stores for the “perceived cost” and convenience. But great bargains on sturdier and better-quality gifts can be found elsewhere, he said.

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