THE BURNED OVER DISTRICT

That is why the hottest retail segment in America is the "Dollar" stores, Family Dollar, Dollar General, Dollar Tree and the like.

Mid-market retailers like Wal-Mart Stores Inc, Macy's Inc and J.C. Penney Company Inc have been struggling in recent years as consumers have been slow to return to their pre-recession, freer spending ways. On Wednesday, Target said it was cutting its full-year earnings and slashing prices.

But the popularity of so-called dollar stores is growing. Shopping by the 46.5 million Americans living below the poverty line poor helped boost the annual U.S. market for deep discount stores by 45.7 percent to $48.2 billion between 2008 and 2013, according to London-based market researcher Euromonitor International. The firm projects the sector to grow to $57 billion in 2018. The U.S. Census sets the poverty line at $24,000 a year or less for a family of four.

Such forecasts help explain the battle over Family Dollar, the number-two deep discount chain. Market leader Dollar General Corp on Monday made its $78.50 a share bid, which Family Dollar rejected on Thursday, citing antitrust concerns. In July, the third-ranked chain, Dollar Tree Inc, bid $74.50 a share. Family Dollar has said it prefers Dollar Tree's lower offer.

The deep discounters' reliance on poor Americans, who made up 15 percent of the U.S. population in 2012, compared with 12.5 percent in 2007, has been validated by investors. From 2000 to now, as the poverty rate rose 11.3 percent to 15 percent, Family Dollar's stock price rose by about 300 percent.

Against that backdrop, the bidding over Family Dollar, said Kurt Jetta, CEO of retail analyst Tabs Group, reflects an "acceptance that there will be a sizable and perhaps growing low-income population that makes dollar stores an ongoing opportunity."

Not all analysts agree that dollar stores are poised for continued growth. Roger Davidson, a former grocery executive at Wal-Mart, Whole Foods Market Inc and Supervalu, said dollar stores face increasing competition from other discounters, including Walmart itself, which is opening smaller neighborhood stores.

"Consolidation is now the only path to growth in sales and earnings," he said.

And unless corporate America keeps squeezing the working class, the "Dollars" may have already filled their niche and have only corporate cannibalism ahead.