According to new research  from The Nielsen Co. middle- and high-income shoppers have been turning to chains like Dollar Tree, Family Dollar, and Dollar General for everything from packaged foods and household cleaners to personal care items and apparel in growing numbers. 

Nielsen’s analysis of consumer shopping habits shows people at all income levels shopping more at dollar stores, with high-income shoppers spending 18 percent more at them in the second half of 2008 compared to the prior year.

Originally taking their name from the fact that most products sold for $1 or less, today’s dollar stores offer products at a wider range of prices. Nielsen says that only 23 percent of products, on average, still sell at or below the $1 price point. Even so, the continued focus on comparatively low prices and value is drawing shoppers from all income levels. According to Nielsen, an estimated 65 million U.S. consumers shopped at dollar stores in past year.

“The troubled economy and rising costs in healthcare, education, and food have caused everyone -- even those with high incomes -- to rethink where they purchase basic household goods,” said Jeff Gregori, vice president, Retail Services for Nielsen. “Five years ago, shoppers weren’t sure what they would find in a dollar store. Today, dollar stores are delivering more consistent selection and value, and consumers are shopping dollar stores more regularly…”

Despite the increase in spending among well-heeled shoppers, low income consumers remain the dollar stores’ meat and potatoes. In fact, 45 percent of sales are from household incomes below $30,000 a year, Nielsen says.

The most loyal dollar store customers tend to have low incomes and live in small towns and rural areas or in urban centers. Senior couples, senior singles (particularly widows) and younger families with children are more likely to shop in dollar stores only occasionally, relying on other retail channels to meet the rest of their household needs.

Among regular dollar-store shoppers, the most commonly purchased household items include paper goods (napkins and paper towels), detergents, trash bags, and cleaning and laundry supplies. The most popular foods are candy, snacks and cookies. 

We at Consumer Reports have mixed feelings about dollar-type stores. There’s no doubt that the cheap prices can be more enticing than ever as shoppers try to stretch their budgets. But they are notorious for selling cheaply made items that may not meet safety standards, from lead-laden toys to unsafe extension cords to poorly made batteries that leak. If you’re going to shop at dollar stores, stay away from items that seem cheaply made or are off brands, especially items made in China. In fact, it's best to avoid buying electric items, medications or children’s products at dollar stores altogether.