5 Ways to Avoid Dollar Store Spending Traps

By Anne D'Innocenzio, AP Retail Writer

NEW YORK (AP) — Dollar stores, which now sell everything from beauty products and turtlenecks to peanut butter, soft drinks and ice cream, are increasingly popular and can be rewarding places to shop, but they also can be overwhelming.

Stores that offer most or all of their stock for $1 or less — the modern version of five-and-dimes, where most merchandise went for 10 cents or less — have picked up substantial new business as consumers seek bargains during the recession.

"Dollar stores have been establishing their credibility with a much wider range of brand names and household products," said Wendy Liebmann, chief executive of WSL Strategic Retail.

The stigma has lifted from shopping at chains like Dollar Tree Inc., Dollar General Corp. and Family Dollar Stores Inc., as well as local outlets like Jack's 99 Cent Store in Manhattan, said Cheryl Holland Bridges, director of the Center for Retailing Studies at Texas A&M University.

Customers with more to spend than dollar stores' mainstay low-income shoppers are flocking to them to buy products from Coca-Cola Co., H.J. Heinz Co. and other major manufacturers such as Bugle Boy. Bridges said even shoppers who still buy shoes at luxury department store Neiman Marcus will head to a dollar store for generic items like sponges.

But experts caution that not everything at dollar stores is a deal, and not everything costs $1: This week, Jack's 99 Cent Store was selling Lands' End cotton turtleneck shirts for $4.99 and Haggar corduroy pants for $12.99, both arguably excellent prices. It also had a Cuisinart seven-cup food processor for $99.99, computer cases for $39.99 and king-size 300-thread-count cotton sheet sets from J.C. Penney's Home Collection for $34.99.