From Bargains to Bare Shelves: Family Dollar to Close Nearly 1,000 Stores

Dollar Tree is closing nearly 1,000 Family Dollar stores across the nation because it can’t compete with Bidenflation and other discount retailers. The company announced its decision this week after disappointing quarterly results.

Reuters reported on Wednesday that the discount retailer has “struggled to deal with a shift in consumer spending from higher-margin products such as home decor, electronics and toys to lower-margin necessities.”

The discount chain announced it would close 600 Family Dollar outlets in the first half of fiscal year 2024, and another 370 over a few more years. It will also shut down 30 Dollar Tree stores as their leases expire.

On the company’s quarter-end call, CEO Rick Dreiling said: “We have begun a comprehensive review to identify underperforming Family Dollar stores that do not align with our transformational vision for the business.”

I’ll give you some context for Dreiling’s announcement, which was full of buzzwords and jargon, that it will close one store out of eight.

Family Dollar sells “higher margin products”, such as $18 queen-size Comforters, $25 Bluetooth speakers, and $6 Batman Action Figures. Many Americans are no longer able to afford even discount items such as these and have switched their purchasing habits to “lower margin essentials” such as food and gasoline.

It’s not true that the economy is booming. But Family Dollar won’t do in an age where moms have to sacrifice the $8 Maybelline Concealer to put more gas in their car so they can get to work on time.

Not all those Family Dollar sales just disappeared. Walmart, for example, was the destination of many, if not all, of those lost Family Dollar sales. The fact that the majority of discount shoppers did not move from Family Dollar upmarket to Target but instead downmarket to Walmart and Dollar Tree is a good indicator of the state of the economy.

Dollar Tree has changed. Inflation forced the company to raise its famous dollar-for-everything price to $1.25 on most items back in 2021. Dollar Tree CEO Michael Witynski stated at the time, “The additional price point allows us greater flexibility in managing the overall business, particularly in a volatile and inflationary environment.” It was a good thing for the company because it allowed them to generate enough revenue to continue growing. At least in the Family Dollar stores, those days of growth seem to be gone.

Even though inflation is stubbornly high, the company does not want to increase prices. This shows how their bottom line will be hit if they alienate increasingly price-conscious consumers.