The latest consumer confidence index and a slew of retailers'recent quarterly reports provide evidence that the consumer hasdecided. Recession or not, they are feeling the pinch.

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"The Consumer Confidence Index continues losing ground and, withthe exception of the Iraqi War in 2003, is now at its lowest levelin nearly fifteen years," says Lynn Franco, director of theConference Board Consumer Research Center. "The weakening inconsumers' assessment of current conditions, fueled by acombination of less favorable business conditions and a sharp risein the number of consumers saying jobs are hard to get, suggeststhat the pace of growth in early 2008 has slowed even further,"Franco adds.

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"Consumers' expectations have also deteriorated significantlyand are now at a seventeen-year low. With so few consumersexpecting conditions to turn around in the months ahead, theoutlook for the economy continues to worsen."

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"Any discount store is going to do well in this climate,providing they focus on needs versus wants," says Green. "Dollarstores have the word 'value' all over them, and they will getshopped," he notes, but adds, "their challenge will be to turnthose visits into sales."

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"A problem with dollar stores, is they are sometimes hurtbecause the consumer feels their merchandise is substandard," saysBritt Beemer, chairman of America's Research Group, based inCharleston, SC. "Even for a dollar, the product has to havelifecycle. If the consumers believe they are not getting junk, andthe product won't break in 30 seconds, the dollar store willbenefit," he tells GlobeSt.com.

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This wisdom is not lost on Matthews, NC-based Family DollarStores Inc., which operates more than 6,400 stores in 44 states.During a conference call reporting the company's first quarterresults, Howard Levine, chairman and CEO, said, "While categoriesmeeting every day consumable needs continued to perform well, ourcustomers were more restrained with their discretionary spendingthis quarter.

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"Given the current economic environment, we do not expect thistrend to improve in the near term," Levine continued. "To betterreflect our customers' needs in this environment we arestrengthening our assortments in key consumable categories, (and)we are shifting our emphasis within discretionary categories."

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Without specifically showing its hand, management of rivalDollar Tree Stores Inc., also referred to the current climate.During that company's fourth-quarter conference call in lateFebruary, Bob Sasser, president and CEO, said, "The outstandingvalue that we offer continues to make Dollar Tree extremelyrelevant to the customer in the face of the current economicclimate." Dollar Tree, based in Chesapeake, VA, operatesapproximately 3,400 stores in 48 states.

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Beemer notes that many dollar stores now carry items above the$1-pricepoint. "If those products are well marked and represent asignificant discount, and if a majority of the store's products areone dollar or less, the store should do well," he adds.

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Green agrees. "If the product represents good value, it'sirrelevant to the customer if it's more than a dollar. Their brandis price," he says of the dollar store sector, and reiterates:"Their brand equity is only in price."

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Beemer adds, "they are generic. Ask consumers about dollarstores and they rarely distinguish one chain from another."

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