Dollar stores aim to fill bargain shopping niche

LOS ANGELES — After four years without a job and two years living in a Motel 6 in Inglewood, Calif., Jay Payne is Christmas shopping for the first time in a long while.

His three 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. Payne, who landed a parking lot security job this month, is hunting for gifts in the few places he can afford: dollar stores.

“I can drop four quarters and buy my kids a toy here, and they’ll love it,” said Payne, browsing at a 99 Cents Only store in Los Angeles one recent night. “It’s a blessing for the holidays.”

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 perform robustly as shoppers of all incomes flock there to pick up cheap decor and presents.

For the fourth quarter, the category is expected to post a sales increase of 4.2 percent or higher at stores open at least a year, according to business data firm Thomson Reuters.

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

Dollar stores — which typically offer most items for $1 or less, and sometimes goods from $5 to $10 or higher — have expanded rapidly in recent years.

Several chains, including Dollar General Corp., based in Tennessee, and Family Dollar Stores Inc. of North Carolina operate thousands of stores and plan to expand in the West, the home turf of 99 Cents Only Stores Inc. The City of Commerce, Calif., company has nearly 300 stores, mostly in California.

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.

“Whether a gift is a stocking stuffer or not, even if it’s something small, it’s nice if it’s something of quality,” Hanover said.

The dollar chains are bolstered by the financial anxiety of their core customers — people such as Cindy Cordon, who holds a part-time retail job and cares for her 4-year-old son alone.

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