For months, economists and retailers have warned about the financial strain facing lower- and middle-income consumers. Higher earners, on the other hand, have largely been sheltered from the effects of the rising costs of living.

But that may be changing.

A growing number of CEOs and industry insiders, from retailers as varied as Walmart and ThredUp, have said they’re seeing shifts in the behavior of consumers earning $100,000 a year or more. 

Dollar General’s CEO Todd Vasos is the latest to join that growing chorus. 

Dollar General sees a shift among high-income shoppers

Speaking at the Goldman Sachs Global Consumer and Retail conference, Vasos said it’s no longer the chain’s core consumer base (low- and middle-earners) who are feeling the financial strain.

Instead, he says earners of all stripes are now feeling the pinch.

“What we’ve seen in this economy, and again, not a surprise probably to anybody in this room, is we’ve seen a customer across all cohorts of income levels being somewhat distressed, especially in sustained inflation,” Vasos said.

“The interesting thing with this economy, because of the other sustained headwinds of inflation over the years that have passed, [is that] even that middle to upper middle is acting more like a lower-income shopper these days,” he continued. 

Vasos said the company was even hearing from shoppers in the $100,000+ bracket that they no longer felt as though they were high-income, due to factors such as the rising cost of living, inflated gas prices, and stagnating wages.

As a result, the CEO says they’ve become more value seeking than ever, shopping at discount retailers like Dollar General for essentials. 

This is not the first time Vasos has spoken out about the financial health of Dollar General’s shoppers.

During the retailer’s second-quarter earnings call in late August, he told investors that the chain’s core consumers were in “distress” and “definitely still stretched.”

Dollar General’s CEO said middle- to upper-middle-income shoppers have begun to act more like lower-income shoppers.

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Dollar General finds opportunity in trade-down shoppers

Despite these financial challenges, Dollar General isn’t worried about the state of its business. 

Instead, executives are confident that its proximity to shoppers and its value proposition will keep it afloat whether budgets remain tight or the economic tides turn.

“We’re very convenient, right?,” Vasos said at the Goldman Sachs event. “We’re close — we’re within 5 miles of 75% of the U.S. population. Many of our customers ride a bike to our stores or walk to our stores. That’s how close they are.”

The distance piece alone makes Dollar General many consumers’ first choice, Vasos continued. Especially if high gas prices are a concern and are placing pressure on household budgets. 

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But should gas prices go down and economic pressures ease, the chain isn’t worried that shoppers, even high-earning shoppers, will stop visiting.

“We have been in similar, of course, economic times historically,” Dollar General COO Emily Taylor said. “And if you look at our track record of retaining the trade-in customer, we’ve done pretty well.

“I think that ultimately comes from the fact that customers who may not be as familiar with Dollar General are surprised when they shop us in terms of the value,” she continued. “They’re surprised when they shop us in terms of the breadth of assortment that we have available. And those things stick long after maybe the economic cycle changes.”

Taylor also pointed to a handful of changes Dollar General has made in recent years, including the ability to target shoppers with specific offers, as another way the retailer hopes to turn those trade-in shoppers into long-term customers.

Dollar General wants to make its prices harder to beat

In light of the current economic situation, and the fact that a growing number of shoppers are relying on Dollar General, Vasos said the chain is placing a renewed focus on keeping prices low.

“The one thing that sets Dollar General apart and now more than ever is that $1 price point,” he said. “Having 2,000 items at or below $1 is very meaningful for the consumer, always has, but especially in this environment.

“And not only are we cultivating that, but we’re growing that,” he continued. “We like [the $1 price point] so much and the consumer has. We’re actually going to put more of that in as we move through the back half of this year.”

According to a recent report from The New York Times, 16% of households report high levels of financial stress, and 17% are in a “vulnerable” position.

That makes retailers like Dollar General increasingly important for consumers trying to stretch already-tight budgets. And the retailer appears to be preparing for that behavior to persist.

It’s adding more products to its $1 assortment, betting that the demand for extreme value will stick, even among shoppers who once considered themselves firmly outside Dollar General’s core customer base.

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