Dollar General CEO warns poorer Americans are lacking funds

After his company released data pointing to poorer Americans running out of cash at the end of the month, Dollar General CEO Todd Vasos said customers have informed him they are increasingly concerned about the impact inflation is having. on their finances.

Conformable Financial TimesDollar General sells a wide variety of goods at low prices in rural towns or low-income communities. According to their sales data, their sales figures took a significant hit towards the end of the month, which retailer assigned to families facing a lack of funds.

Vasos says the core customers of his company’s stores are households earning less than $35,000 a year. He told him Financial Times that those households feel “financially constrained”.

Vasos continued: “Most of them say they feel worse financially than they did six months ago, as higher prices, lower employment levels and increased borrowing costs have negatively affected the sentiment of income consumers small”.

Conformable Fast company, Shares of Dollar General fell 30% on Aug. 29 after its earnings report was released. Although the company blamed its dismal sales figures on cus economic anxietyanalysts said this is likely due to other customers choosing to shop at Walmart and Target, rather than low-income families.

“What’s different from previous economic times where consumers are under duress is that we don’t see trade-up customers (more affluent shoppers who would visit Dollar General to buy items at lower prices) as much as we did in the past” , Joe. Feldman, senior managing director and deputy director of research at Tesla Advisor Group, said Fast company. “This customer shops more often at Walmart and online. There are a lot of other places now that the average or slightly more affluent consumer can shop, and I think that’s what’s driving the pressure.”

In addition to the pressure facing Dollar General, Vox reported in 2023 that inflation was not really a problem for the average consumer, but high prices remained even as inflation cooled.

According to Rob Rich, director of the Cleveland Fed’s Center for Inflation Research, high prices will persist if people refuse to shop.

“Since the pandemic and since we started raising interest rates, we’ve actually seen the rate of inflation slow. Now… that doesn’t mean prices have dropped. What it means is that prices are not rising as fast as before.”

Rich continued: “Episodes where prices really go down can be really, really bad for the economy,” Rich said. If consumers expect prices to fall further, they hold back on buying and cut back on spending, which can hurt business and affect employment. Deflation is also bad for contracts like mortgages and other debt instruments, he explained, because the amount of money borrowers have to pay is fixed, and if prices fall, it becomes more of a burden. “While everyone might initially think, ‘Oh yeah, let’s let prices go down,’ that can actually be very problematic for an economy.”

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