When the Great Recession hit in 2008, most every business in America took a major hit that lasted for years. One of the few industries to benefit, though, were dollar stores. To put it indelicately, when more people are broke, more people are shopping for the cheapest thing available.
The success of these bargain stores that tend to sell in small units that result in a lower per item price culminated in a bidding war between Dollar General and Dollar Tree for competitor Family Dollar. Dollar Tree eventually won with an offer of about $9 billion in 2015 for Family Dollar’s more than 8,000 stores. The deal hasn’t worked out well. Family Dollar has dragged down the company, despite growth at Dollar Tree. In the latest earnings report, Dollar Tree saw its same-store sales increase 2.3 percent, while Family Dollar’s fell 0.4 percent, the Wall Street Journal reported.
Dollar Tree said it plans to renovate about 2,000 Family Dollars over the next two years, along with closing an unspecified number.
Among the casualties is Columbia’s Family Dollar on South High School Avenue. It’s not a surprise to anyone who has shopped there. For example, before the Columbia Christmas parade, when Dollar Tree was packed, we went to Family Dollar, which had not announced its closure yet, and were the only shoppers there. Among other things, it didn’t help when a clerk there was shot twice in the neck during an armed robbery earlier this year.
But beyond extenuating circumstances like that, Dollar Tree and Dollar General have at least two things going for them that Family Dollar doesn’t.
First they differentiate their stores. In Dollar Tree’s case that’s a unique touch where everything costs exactly $1, which makes it a fun place to shop even for people who aren’t living in poverty. For Dollar General, it’s being located in extremely rural stores, like the newly opened ones in Goss and Sandy Hook, where other shopping options are few-to-none.
Secondly, their stores tend to be up-to-date and well organized.
Family Dollar misses out in both of those regards. Its stores aim mostly for low-income customers, yet don’t seem to do anything in particular to draw those people, and the shopping environment tends to be cluttered.
Yet Dollar Tree’s stock actually rose after its earnings announcement because stock owners believe the investments in improving Family Dollar will eventually pay off.
That’s an important lesson for other businesses. Even in today’s economy, where everyone is obsessed, usually to the detriment of themselves and their communities, with everything internet, brick-and-mortar stores can thrive if operated correctly. That means both a unique selling point and a well-managed, attractive store. Those simple things go a long way.
— Charlie Smith