Carmen Duarte

Nov. 30, 2008 (McClatchy-Tribune Regional News delivered by Newstex) -- Thrifty spending during this economic slump is leading shoppers to dollar bargain stores, which are cashing in while other retailers watch their stocks plummet.

Family Dollar and 99 Cents Only stores (NYSE:NDN) are doing well locally as they are across the nation because shoppers say they are saving their pennies.

The high volume of shoppers and the wholesale purchases by the bargain chains are behind the stores' booming success.

Family Dollar shares are up roughly 42 percent this year, said Josh Braverman, public-relations manager for the chain headquartered in Charlotte, N.C.

"Shoppers are buying needs, not wants," said Braverman.

The average purchase is roughly $10, and consumers are coming for name brands and the value that they get on those products, he said.

Imelda Ramirez, for example, was shopping at a Tucson discount store last week. She stopped at 99 Cents and Discount Mall at 502 W. Ajo Way to buy snacks and items for a trip to Nogales, Sonora, where she plans to stay until Christmas.

"I live in Phoenix and I shop at Family Dollar stores. (NYSE:FDO) I buy cleaning supplies, paper plates, makeup, canned goods and toilet paper. The money you save adds up," Ramirez said.

Family Dollar's retail net income for the fourth quarter of fiscal 2008 rose about 41 percent to $53.2 million, compared with $37.8 million for the fourth quarter of fiscal 2007, said Braverman.

There are 6,500 Family Dollar stores in 44 states, with 130 in Arizona, including nearly a dozen in the Tucson area.

Meanwhile, 99 Cents Only Stores, based in City of Commerce, Calif., reports that its retail sales increased by 9.2 percent to $276.4 million for the second quarter of its fiscal year, which ended in September, compared with the second quarter last year.

There are 311 99 Cents Only Stores in four states, with 27 in Arizona, four of them in the Tucson area.

The 99 Cents Only Store at 1675 W. Valencia Road is the second-busiest store in the state, said manager Larry Wilhite.

"We are about 25 percent, way up, over last year in sales. We receive thousands of shoppers a week," said Wilhite, as he watched customers lining up at the cash registers.

In addition to paper goods, household items and Christmas decor, people are buying groceries, including produce, deli, frozen foods and canned goods -- brand names at 99 cents or below.

"We receive trucked shipments of produce three times a week from our Los Angeles distribution center," Wilhite said.

Veronica Blanco, 31, with her children, Mylenka, 2, and Diego, 5 months, in tow, shopped there last week.

"This store is very cheap. I come here three times a month and buy all my fruits, vegetables, potatoes and breads. I am seeing so many more shoppers," she said.

Blanco said her husband, Diego, who is a construction worker, could not believe the prices when he recently accompanied her to the store.

At the 99 Cents and Discount Mall, manager John Nguyen said he began seeing a visible increase in shoppers last month. "I expect more people as Christmas nears," Nguyen predicted.

Items at the discount store start below 99 cents and climb up to $75 for an electric guitar, which is the highest-priced item, Nguyen said.

Last week, Elias De La Cruz accompanied his mother, Sara, to the store to shop for paper products, including plates and napkins, for holiday meals.

"I plan to come back for Christmas ornaments," said De La Cruz, 37, while eyeing gold-and-silver packaged decorations priced at 99 cents. "They look really nice and you can't beat the price.

"I think consumers are being conscientious right now because of our economy. You just don't know when you might lose your job," said De La Cruz, who is on disability because of a back injury.

Shopper Sandra Esquer, 43, said she likes to shop for soaps, laundry supplies and canned goods. On average she saves about $15 each time she shops at discount stores when compared with buying at chain supermarkets, she says.

"Retailers in discount items are doing well because working or not, shoppers are just really careful on how they are spending their money," said Laraine Rodgers, a University of Arizona adjunct professor in the retail and consumer sciences division of Lundgren Center for Retailing.

"People are buying basics, and they are giving food again as gifts," she said. "The pendulum has swung a ways back. We don't want to get in more debt or in debt.

"Most definitely people are changing their behaviors. Before, more shoppers may have turned their noses up at discount stores, but not anymore. People have to eat, so why not go to the dollar stores?"

For some consumers, shopping at bargain stores may be a temporary choice, but for others it may become a new way of life as they realize they need to save money and earn security as they move forward, Rodgers said. "People are going outside of their comfort zones in shopping," she said.

Bargain hunters come in all ranges of annual earnings, said Rodgers. In an Internet search of discount stores in California, Rodgers found numerous locations near communities where families earned annual incomes in six digits.

Larger stores, such as WalMart and Target, have started to discount more and are placing more dollar items on their shelves, said Rodgers. "They need to stay competitive."

"Most definitely people are changing their behaviors. Before, more shoppers may have turned their noses up at discount stores, but not anymore."

Laraine Rodgers, University of Arizona adjunct professor in the retail and consumer sciences division of the Lundgren Center for Retailing

DID YOU KNOW

There are more than 30 $1-and-under discount stores in the Tucson area, the phone book shows.

HOLIDAY SPENDING TIPS

--Make a list before you go shopping.

--Plastic is not free, so use a debit card for most purchases if possible. If you use credit cards, transfer balances to no-interest balance-transfer offers and cancel the original credit card.

--Shop early so you can have the first shot at super-saver items, shop late to avoid crowds because it is easier to navigate the stores, and shop often to find larger discounts.

--Shopping online offers great bargains and there is free shipping.

--Be imaginative. Gift baskets can be created for under $10.

Source: Laraine Rodgers, a UA adjunct professor in retail and consumer sciences

--Contact reporter Carmen Duarte at 573-4104 or at cduarte@azstarnet.com.

Newstex ID: KRTB-0014-29997628