Family Dollar, the struggling discount chain that caters to low-income customers predominantly in cities, will close about 1,000 stores as inflation takes a bite out of consumers’ wallets and low-cost-retailers’ profits.
Family Dollar will close 600 locations in the first half of 2024 and 370 stores over the next several years as store leases expire.
Dollar Tree, which owns Family Dollar, also said it will close 30 stores as leases expire.
Dollar Tree bought Family Dollar in 2015 for $8.5 billion. The combined company hoped that by joining forces, it could grow its customer base, reduce costs and fend off bigger retailers like Dollar General and Walmart. But Dollar Tree has struggled to integrate Family Dollar.
You'd think inflation would mean people shop at low cost places. During the great recession Dollarama took off. More likely they had bad management.
Except the prices per unit at these places are often actually higher for the same goods than at other retailers. They just sell them in smaller quantities. Or they sell objectively lower quality products at similar prices.
Sounds like bad management.
Bad business model
Cheap products at cheap prices is a fine business model. Failure to properly execute on that is bad management.
You misunderstand. I'm saying none of their stuff is sold at cheap prices. They both sell the same name brand products at higher prices per unit than competitors (just in smaller quantities), and lesser quality products at the same prices as the name brand products elsewhere. They sell cheap stuff at normal prices and normal stuff at inflated prices. They just sell them in smaller packages so the shelf price is lower, but so is what you get for that price. Instead of buying 1000 paper towel sheets for 4 dollars (250 sheets/$) they'll sell a roll of the 600 paper towel sheets for 3 dollars (200 sheets/$) for the same brand. Yes, you only paid $3 instead of $4, but you also got less for your money.
Dollar stores take advantage of two things, 1) the average person being bad at math (or at least not doing unit math when they shop) and 2) they put their stores in areas with few other options and edge out competitors until there are no other options for people in those areas. They attract the poorest trying to save a buck, and then milk them for their money. And they both understaffed their stores and underpay their employees because people don't have any other choice in many places these stores exists. They have a chokehold on rural areas, particularly in the south. The most amazing part of this story for me is that they are closing any stores because they are famously EVERYWHERE. They breed like rabbits. But they are terrible businesses for the consumer and they shouldn't exist, imo.
I understand that they are not cheap prices. That means they have failed in execution. And horribly so if they have to close stores.