I'd be curious to hear others thoughts on whether TEMU is materially eating into DG's wallet or market share.

I have only seen public reporting to date, and I'm less than confident it is describing the real story. The reporting that appears to be getting clicks is a report from Earnest that purports to show that TEMU is eating from a fixed discount retailer pie. Reuters, for instance, reports the issue thus:

Tennessee-based Dollar General has seen the steepest decline in market share compared to competitors, according to Earnest Analytics. It held a 43% market share in November, down from about 57% in January. Dollar Tree's share slid nearly four percentage points from 32% in January to 28% in November.

If we're talking about market share, I confess I don't see how this is close to possible, given that (1) we know that dollar stores such as DG and DLTR are increasing their very sizeable revenues in the dollar store space, not decreasing them; and that (2) DG's revenues are about 80% consumables, which are likely to be largely unaffected by TEMU. My guess is that what we have here is an expanding and ill-defined denominator/'market' (revenue in the discount retailer category, with 5 retailers exhausting the category), and the bargain hunting consumers of DG highly correlate with the bargain hunting consumers on TEMU -- on (mostly) separate kind of purchases.

I had a look at Earnest's public facing materials, and it appears the reports allege a significant change in wallet share being spent on 'discount retailers' -- they don't allege a change in market share. They don't clarify, however, whether the total spend on a wallet category they appear to be using (all sales at DG, DLTR, OLLI, or FIVE + TEMU) has expanded, and by how much. Indeed, if TEMU is generating sales that would not ordinarily be sales made at a dollar store, while all other stores in the category are expanding their revenues, the wallet category (DG/DLTR/OLLI/FIVE/TEMU) they are using seems to be both a growing and very ill-defined pie.

Earnest also goes further by alleging things like "The data suggests that Temu has initially had the biggest sales impact on general merchandise dollar stores like Dollar General, Dollar Tree, and Family Dollar." There's quite a bit that needs to be known for this kind of causal statement, and I haven't seen that kind of data in the news reporting to date to substantiate the claim.

As an example of what I'm talking about, here is one of Earnest's releases: earnestanalytics.com - Temu takes share of wallet from dollar general dollar tree customers

All that said, I'm looking for some insight on how TEMU might actually be changing the discount landscape, and whether it is sustainable in any event (my understanding is TEMU is losing significant money on its US sales). I assume there is better data out there, but I haven't seen it. I'd wager that TEMU is eating into DG's and DLTR's non-consumable product categories at the margins, and TEMU and future imitators may pose some real risks to DG's popshelf concept, but I have significant doubts it goes or will go much beyond that.