Posted on 04/11/2024 2:41:10 PM PDT by george76
Here's a look at what's gone wrong at both chains..
These are tough times for two big US dollar store chains. In the past month, Family Dollar said it will close nearly 1,000 stores and 99 Cents Only said it will go out of business.
Both companies said inflation and shoplifting have contributed to their troubles. While inflation has pressured the companies' low-income customer base and shoplifting has squeezed their profits, those factors alone can't explain their difficulties.
Years of strategic mistakes and underinvestment have plagued Family Dollar and 99 Cents Only, retail analysts say. Both brands were acquired by other companies and faltered under their new owners.
Family Dollar has around 8,000 stores mostly in cities, and the chain has struggled since Dollar Tree bought it in 2015 for $8.5 billion. Dollar Tree believed acquiring Family Dollar would help it compete against larger rivals. But it misjudged the deal.
Since the "botched acquisition," Family Dollar "has caused Dollar Tree nothing but hassle," Neil Saunders, managing director of GlobalData, said in a recent note to clients. "Basically, almost ten years on, Dollar Tree is still sifting through the mess it inherited and has not been able to completely turn around."
99 Cents Only, a chain on the West Coast and Texas, has also suffered from missteps, including stores that were too large and inefficient to run.
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Family Dollar will close 600 locations this year, and 370 stores over the next several years as store leases expire. These locations are unprofitable for the company
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Family Dollar's woes date back more than a decade. Messy stores, high prices and over-expansion plagued the company
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In 2014, activist investors- including Carl Icahn and Nelson Peltz - pushed Family Dollar to sell itself. A year later, Dollar Tree bought the company.
At the time, Dollar Tree was smaller than Family Dollar. While Dollar Tree and Family Dollar share similar names, they have different strategies.
Dollar Tree is mostly suburban, and caters to middle-income shoppers with party supplies and knickknacks. It acquired Family Dollar - which sells more basic foods and household essentials - to grow with lower-income customers in urban and rural areas.
The combined company hoped that by joining forces it could grow its customer base, reduce costs and fend off bigger retailers like Dollar General, which is located primarily in rural areas.
But analysts say the match between the two different chains was a poor fit, and Dollar Tree has struggled to manage the larger Family Dollar store base.
"When Dollar Tree bought Family Dollar, they didn't really know what they were doing," D'Arezzo said. "They didn't know how to run Family Dollar."
Family Dollar stores were in worse condition than Dollar Tree management expected, and early strategies to improve sales, such as selling beer, fell short.
Many Family Dollar stores were located too close to each other and cannibalized each other's own sales, too, D'Arezzo said.
"Family Dollar's sales have been sputtering, hurt by neglected stores, poor product selection and unhappy workers," The Wall Street Journal reported in 2018. Family Dollar "needs more work than the company originally thought."
A year later, an activist investor pushed for a sale of the "underperforming" Family Dollar business, and Family Dollar announced it would close 390 stores.
Even though Family Dollar has renovated thousands of stores in recent years, many stores are still poorly maintained, analysts say. Family Dollar was hit with a record $41.6 million fine by the Justice Department this year for violating product safety standards after selling items that were stocked in a rat-infested warehouse in West Memphis filled with live, dead and decaying rodents.
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99 Cents Only said that it filed for bankruptcy because "the last several years have presented significant and lasting challenges" in retail, including the impact of the pandemic, inflation and rising shoplifting.
But 99 Cents Only's challenges stem back further. The retail chain has not been profitable since 2015.
The company has more than 370 stores in California, Nevada, Arizona and Texas - 265 of which are in California. It was taken private in 2011 in a $1.6 billion leveraged buyout, and the company took on even more debt in the following years to stay afloat.
At the time of the deal, 99 Cents Only had the second-highest profit margin and the most sales per square foot among its rivals
STUPID headline. Neither of the stores mentioned is referred to casually as "the dollar store," but the Dollar General IS "the dollar store," and it's decades older concern than either of the others.
The DG in my small town has fresh veggies.....
This article is obv cover for the current regime’s failanomics and refusal to address retail theft.
There is a lot of truth here but in the end it is ludicrous.
If demand existed they would be replaced by profitable operators. Their response to inflation when profitable was to offer: smaller, lesser etc....for $1.
The stores and dollar menus became ubiquitous under CLinton’s inflation. The idea that inflation killed the dollar store seems ridiculous.
Amazon and the like probably hurt them like many other retailers too.
Hillary Clinton was once asked about how federal regulations hurt small businesses. Her response: “I can’t worry about every undercapitalized business.”
So, yes. These people don’t have a clue. But it’s a bit more than that. They are also casually evil.
These stores used to be stocked with close out items, often from other chain stores or from overseas (especially food items from Latin America). Since the Chinus, these sources have dried up. Plus it is too expensive nowadays to make things to sell for under a dollar, even in China.
My husband LOVES the 99 Cents stores. He finds some brand names of food items that cost several dollars more in regular supermarkets. I like their packaged figs and organic apples. They never seem short of customers.
Nothing special...quality or price.
I've been to Dollar Tree/other...much better value.
(at least it used to be...with today's inflation...???, haven't been to the others in awhile)
Brandon will order them to stay open and cut prices. Come on man! Sell your fair share and stop gouging!
I like dollar stores for stuff like TP, garbage bags, etc.
.......the Dollar General Store (#15792) near me is right on a geographic line between one of the wealthiest zip codes in Texas and one of the poorest..........so I doubt if it closes as it seems to do a fair amount of business.
I buy a few basic items there because they ARE much cheaper than the local grocery store. That said, the store is NEVER clean, at least 3 of about 10 isles are completely blocked with boxes of merchandise that needs to be placed on the shelves and you can find, if you look and yell loud enough 1 employee to check you out. The auto CC check out device never works.
They retrofitted the one closest to me, it has some fresh veggies/foods. I rarely stop there because it’s 15 minutes away, and just 5 minutes further there is a full Publix that is quite a good store.
I do have a recent story that’s a little funny and a bit of a head scratcher.
I was at the Publix center for something else, and went in Publix because I needed some epoxy for a project. In the home section they had two kinds of Gorilla Glue, and 5-6 kinds of Gorilla Glue-branded superglues (!!). But no epoxy.
I punted, stopped in at DG, and they had JB Weld, which was perfect for my needs. And at a good price.
Whoever is doing the merchandising for Publix in this area is an idiot, if you ask me.
I live in a rural valley.
FAMILY DOLLAR & DOLLAR GENERAL are literally across the street from each other.
A gallon of milk at Family Dollar is often over $1 more than a gallon at Dollar General.
Dollar General store is cleaner & has a happier staff.
I love Dollar Tree even though everything isn’t a dollar anymore. They still have good deals.
BIDEN recently DEMANDED fresh Veggies & fresh meat.
Whenever one business acquires another, there must be sufficient gains to pay for the deal. These are euphemistically called “synergies” and can include everything from reduced headcount by eliminating duplicate HR, accounting, finance, etc functions to closing redundant facilities. Acquisitions are paid for with debt and the synergies must be at least able to service the debt, but in a public company there must be greater gain than could have been done by not doing the acquisition and just investing that money. This is why many deals fail to deliver the promised and expected results, and why many C-level executives end up leaving to “pursue other opportunities” after a year or two of failure to achieve promised results.
There are many examples of successful deals, but many MORE examples of failed ones.
I still miss Woolworth’s.
I noticed that happening at Walmart. From 2020 onward, for many items, the price tag on the shelf was lower than the price that rang up. I think Walmart hoped the customer wouldn't catch it, but I always did. At first, the staff would give me the lower price, but eventually, they refused to. A year passed, and they never updated the price tags on the shelves, so I stopped shopping there so much.
Are Dollar Stores “closing across the country” or are they closing in select locations. Our local Dollar General stores are always busy and we had a new Dollar Tree open nearby just a few months ago. The parking lot of the new DT is always over half-way full.
It would seem to me that such a business in the current economy would look at their bottom line, make note of where retail theft is the worst, and close those stores in favor of concentrating growth in more law-abiding states. They also have to look at insurance costs state to state. Are there more insurance claims for both theft and PI in certain areas thus causing insurances costs to increase? If so, close those stores and build more in conservative states where insurance costs are lower and juries don’t award millions of dollars for a fake slip and fall PI claim.
They were busted, ripping off customers.
And here I thought they were actually vehicles to launder money...like monthly storage places. /s
First time in a Family Dollar my buddy and I roam the store looking for beer. None to be found, we go to the cashier asking where the beer was and get told “sir, this is a family store. We don’t sell beer”
I tell her that everyone in my family drinks beer and head out the door. That’s what their problem is.
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