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Was is having a dollar section necessarily going down market? They're just loss leaders, to get you into the store. I love Target's dollar section (even though there's now a $2.50 section of the $1 section), and surely Target is considered slightly more upscale than Walmart.
There's a "Family Dollar" chain store not too far from me, with all sorts of cheap merchandise (though not always just a dollar), and to say that the people I see going into it are downscale is the understatement of the year. I went in there once, just once, and flad in near-revulsion after a few minutes. It took a lot of self-control not to burn my clothing and bathe in Clorox.
And yet, there also are a number of independent, mostly Asian-run 99 Cent stores in the area, and they seem to attract a solidly working class and middle class crowd. Far unlike the lumpenproletarians at Family Dollar. I wonder why?
Ah, Wal-Mart, the doughty oft-defamed champion of consumers. I tip my hat to thine buck-denominated scheme, O slayer of inflation.