In absolute terms, or just on average? This may be the case simply because the US population went from 250 to 320 million people over that time, but household disposal income is up considerably as well.
An alternative answer may be that Dollar stores have very low franchise fees (~$50K, from one site I looked at) and low inventory costs. This, along with cheap commercial rent, makes it an attractive option for non-tech people who want to start a retail business but don't have a lot of money saved up.
Unfortunately, just because somethings costs more doesn’t mean it will last more. Maybe in the past there were brands that prides themselves on durability, but now most of the stuff seems not to really consider durability and longevity, and the financially smart move might just be to buy the cheapest thing that works and plan on replacing it when it breaks.
Furniture is now disposable. Clothing is disposable (even if you didn't mind fashion, it will end tattered after a couple of seasons. You can still buy excellent clothing, it just costs 5x.
Same as 2008. a lot of ppl left behind in recovery, which benefits Walmart and dollar stores.
1. We have more people without much disposable income (which is composed of two populations: poor immigrants with few marketable skills, and two, poor Americans left behind due to shipping MFG overseas --going on for a while, jump-started by MFN status in the 90s).
2. People want cheap stuff. It's unfortunate. It means more disposable crap going into the landfill. Save up and buy something that will last. (unfortunately ads don't contribute to model behavior here)
3. Overseas there have always been these cheap goods stores (100-goods stores in East Asia (百貨公司)), we're just late to the party --however in Asia these popped up because people didn't initially have disposable income as their economies evolved after ours. They are on the upswing, we're on the down.