Can the Dollar Store Boom—and the Low-Income American Shopper—Survive 2026?

Key Takeaways

• After years of above-average growth, Dollar General on Thursday forecast sales growth would slow more than expected this year.
• Cuts to SNAP benefits, slowing wage growth, and rising gas prices all threaten to force lower-income consumers to rein in discretionary spending.

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The discount stores that have benefited from inflation-pinched consumers may feel the pinch themselves this year.

Shares of Dollar General (DG) slumped Thursday after the retailer forecast same-store sales will grow between 2.2% and 2.7% in its 2026 fiscal year, a slowdown from 3% in 2025 and slightly below analyst estimates. The outlook, the company said, reflects the "potential for continued uncertainty, particularly in consumer behavior.”

Dollar stores have experienced above-average growth in recent years, driven by middle- and high-income consumers trading down to cope with elevated inflation and slowing income growth. Dollar General’s guidance raised questions about whether mounting financial pressures are now squeezing its core low-income consumer enough to offset that.

Why This Matters

Economists have labeled the economy of recent years as “K-shaped”—a reference to the diverging fortunes of upper- and lower-income Americans. Many experts warn that the resilience of higher-income finances has skewed economic data over the past year, obscuring the financial distress of Americans and potentially overstating the economy’s strength.

The pressure on lower-income Americans was evident in the retailer’s results. Comparable sales within Dollar General’s “Value Valley,” a rotating selection of 500 items priced at $1, grew about 18% last quarter, four times faster than the company-wide average, according to CEO Todd Vasos. “It’s ‘value, value, value’ at this point for the consumer,” Vasos told analysts on the company’s earnings call Thursday.

Low-income consumers face avariety of challenges this year. Experts warn the cuts to SNAP benefits enacted by last year’s One Big, Beautiful Bill will result in 4 million Americans having their grocery assistance eliminated or substantially reduced.

The war in Iran’s impact on oil and gas prices is also likely to pressure Dollar General’s core consumers. The national average gas price rose for an eleventh consecutive day on Thursday and now sits more than 20% above its pre-war level.

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“As oil prices climb, the company tends to underperform in comp sales and gross margins” because its customers are more sensitive to higher fuel costs than the average consumer, wrote UBS analysts in a note on Tuesday.

Not only are lower-income households’ expenses rising, their wages are stagnating. In February, after-tax wage growth slowed to 0.6% for the lowest third of earners, according to Bank of America data.

The pressures facing low-income consumers stand in contrast to the outlook for higher-income Americans. The highest third of earners saw their wage growth accelerate to 4.2% last month. The gap between high and low—3.6 percentage points—is the widest observed in data going back to 2015.

Higher- and lower-income consumers are also diverging in their feelings about the economy. The University of Michigan’s Survey of Consumer Sentiment moved very little between January and February because improvement among the largest stockholders and higher-income respondents was almost entirely offset by a decline among lower-income households and those without stocks.

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