In the fluorescent-lit aisles of America's dollar stores, a quiet revolution in consumer behavior is playing out. Shoppers who might once have dismissed discount retailers as beneath their station are now pushing carts through Dollar Tree and Dollar General with increasing frequency—and many of them are earning well into six figures. The trade-down trend that began during the inflation surge of 2022 hasn't just persisted; it has accelerated and evolved into a structural shift in how Americans across income brackets approach retail.
The Six-Figure Shopper Phenomenon
The numbers from Dollar Tree's most recent earnings report tell a story that would have seemed implausible just a few years ago. The company reported that 3 million additional households shopped at its stores compared to the same period a year earlier. Of those new customers, approximately 60% had household incomes exceeding $100,000.
The trend isn't limited to Dollar Tree. Dollar General reported third-quarter net sales growth of 4.6% year over year, reaching $10.6 billion, with same-store sales increasing 2.5%. But the more telling metric was the customer composition: CEO Todd Vasos noted the company was "pleased to see growth once again in our total customer count, with disproportionate growth coming from higher income households."
New shoppers at Dollar General in 2025 are visiting more frequently and spending more per trip compared to new customers last year. The chain is seeing the highest numbers of "trade-in customers"—those who would normally shop at higher-priced competitors—than at any other time in the past four years.
Why Higher Earners Are Trading Down
The phenomenon reflects a broader reckoning with persistent price pressures that have eroded purchasing power across income levels. While lower-income households were the first to feel the squeeze, the accumulation of higher prices across categories—groceries, insurance, healthcare, housing—has now reached middle and upper-middle income brackets as well.
"While higher-end retailers have struggled with cooling consumer spending, value retailers have benefited from the trade-down effect. Middle-income households earning $75k–$100k are increasingly shopping at Dollar Tree for pantry staples."
— Retail industry analysis
The trade-down isn't about desperation for most higher-income shoppers—it's about rationalization. Consumers who discovered during the pandemic that certain items cost significantly less at discount retailers have continued those shopping patterns even as their overall financial situation remained stable. Paying $1.25 for cleaning supplies or $3 for home goods that might cost two or three times as much at conventional retailers has become a point of pride rather than embarrassment for many shoppers.
Strategic Repositioning Pays Off
Both major dollar store chains have evolved their strategies to capture and retain these higher-income customers. Dollar Tree has implemented what it calls its "Dollar Tree 3.0" strategy, introducing a multi-price format mixing $1.25, $1.50, $2.00, $3.00, $5.00, and $7.00 items. This allows the company to carry higher-quality goods and maintain margins despite inflationary pressures.
The strategy addresses a key limitation that had previously constrained dollar stores' appeal to higher-income shoppers: the perception that everything was cheap in both price and quality. By offering a broader price range, Dollar Tree can stock items that meet the quality expectations of more affluent customers while still delivering meaningful value relative to conventional retailers.
Dollar General is pursuing a similar evolution, planning to expand fresh produce offerings to approximately 200 more stores in 2026. The company is also focusing its new store openings on larger 8,500 square foot formats, predominantly in rural communities where it often serves as the primary shopping option for households across income levels.
The K-Shaped Consumer Economy
The success of value retailers exists within a broader context that analysts have termed the "K-shaped economy." High-end spending on experiences—travel, premium dining, luxury goods—continues to show strength among the wealthiest Americans, fueled by significant home equity and stock market gains. But for everyone else, the "value rotation" has become the dominant shopping behavior.
Moody's analysts note that "value-focused retailers are poised to gain market share as consumers trade down." Discount retailers have already reported increases in higher-income shoppers throughout 2025, and the trend shows no signs of reversing as the new year begins.
This bifurcation presents challenges for retailers caught in the middle. Mid-tier department stores and conventional grocery chains face pressure from both directions: losing price-sensitive customers to discount retailers while watching aspirational spending flow to luxury and experiential categories.
Investment Implications
For investors, the trade-down trend has created clear winners. Dollar Tree's stock rose 64% in 2025, significantly outperforming broader retail indices. Dollar General's same-store sales growth suggests the company has successfully stabilized after a challenging 2024, with management guiding toward continued momentum in 2026.
Competition between the two chains remains intense. Dollar Tree plans to open roughly 400 new stores annually, contributing about 2.5% to total sales growth. Meanwhile, its multi-price strategy—currently representing only about 15% of sales—leaves substantial room for expansion. Dollar General's focus on fresh food and larger formats positions it to capture a greater share of overall household spending rather than just fill-in trips.
The broader implication for markets is that consumer spending patterns may have permanently shifted. The pandemic accelerated adoption of e-commerce; persistent inflation may have similarly accelerated adoption of value-focused shopping across income brackets. For retailers unable to compete on price or unable to deliver genuinely differentiated experiences, the competitive landscape has become considerably more challenging.
