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

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

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

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

"A problem with dollar stores, is they are sometimes hurt because the consumer feels their merchandise is substandard," says Britt Beemer, chairman of America's Research Group, based in Charleston, SC. "Even for a dollar, the product has to have lifecycle. If the consumers believe they are not getting junk, and the product won't break in 30 seconds, the dollar store will benefit," he tells GlobeSt.com.

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

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

Without specifically showing its hand, management of rival Dollar Tree Stores Inc., also referred to the current climate. During that company's fourth-quarter conference call in late February, Bob Sasser, president and CEO, said, "The outstanding value that we offer continues to make Dollar Tree extremely relevant to the customer in the face of the current economic climate." Dollar Tree, based in Chesapeake, VA, operates approximately 3,400 stores in 48 states.

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

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

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