Discount dollar stores were booming not so long ago, reaching into small towns and urban neighborhoods across the country. But no longer. Dollar Tree last week announced the sale of its Family Dollar subsidiary for a fraction of what the company paid to buy the business a decade ago.
Weren't dollar stores on the rise? Dollar stores are "thriving in America," said Visual Capitalist in 2019. At the time, e-commerce was "indisputably disrupting" brick-and-mortar retail, which would only accelerate during the Covid-19 pandemic. Nonetheless, 11,000 new dollar stores opened between 2007 and 2017, a rate of "roughly 93 new stores a month, or three per day."
Were there signs of trouble? In 2020, there had been reports of more than "two-hundred violent incidents involving guns at Family Dollar or Dollar General stores since the start of 2017," said The New Yorker. Some of the violence could be explained by the stores' "ubiquity." By that point, there were more than 16,000 Dollar Generals and nearly 8,000 Family Dollars in the U.S. The stores were said to be "thinly staffed and exist in a state of physical disarray," making the stories vulnerable to crime.
What ultimately caused the downturn? "Blame Walmart," said CNN. In 2024, big-box retailers like Walmart and Target "lowered prices on some items in an effort to draw inflation-fatigued shoppers." That took a toll on dollar stores.
While the dollar stores made a number of "strategic mistakes," it has also long been true that Walmart and dollar stores tend to cannibalize each other's sales. As a result, about 600 Family Dollar stores closed in 2024, and Dollar General plans to shut down nearly 100 of its outlets soon.
What's next for consumers? They may go back online. Competition with dollar stores from Walmart and online discount retailer Temu "continues to intensify," said the Financial Times. The folks who once shopped at dollar stores may also be cutting back overall. Chains like Family Dollar rose on "spending by the poorest urban Americans," but inflation and cuts to pandemic-era aid mean those shoppers are "not doing so well." |