Key Takeaways:Dollar store unit and sales growth through July outpaced specialty stores, department stores, and mass retailers.Brands like e.l.f. Beauty and MONDAY Haircare are leaning into the channel to reach untapped markets. While influencers and affordability fuel momentum, challenges such as theft, inconsistent assortments, and poor shopper experiences remain.The third-fastest growing beauty channel in dollar sales through mid-July came from an unlikely player: dollar stores.Although the nation’s 38,000-plus dollar stores represent just 3.4% of total beauty sales, they posted a striking 10.6% year-over-year gain, according to NielsenIQ. That growth outpaced beauty specialty retailers (+5.9%), department stores (+5.4%), mass retailers (+2.1%), and drugstores (+1.7%). Unit sales also climbed 9.4%, the second-fastest increase across the industry.Amazon remained the clear leader, with beauty sales surging 29.8% in dollars and 29.5% in units. But dollar stores’ acceleration highlights a shifting consumer mindset.Fragrance, facial skincare, and hand and body lotions ranked among the fastest-growing beauty categories in dollar stores, NielsenIQ found.“Dollar stores, which were once considered ‘fill-in’ shops for cheap basics, have become primary shopping destinations for millions of Americans—drawing in not just low-income households, but an increasing share of mid- and higher-income consumers as well,” said Viki Zabala, CMO of First Insight Inc.