Dealing for Dollars

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Dollar Tree is trying to address its Family issues. Yesterday it announced it would close as many as 390 of its Family Dollar stores, convert another 200 to Dollar Tree formats and then open 200 additional stores with a new Family Dollar format.

If you have enough trouble keeping track of your own dollars, don’t feel bad about trying to keep up with all of these dollar store developments.  What you need to know is that Dollar Tree bought Family about three years ago after a bidding war with arch-rival Dollar General. Family and General are similar formats in that they sell merchandise for more than a dollar while Tree won’t go over a buck.

This entire segment got a big jolt of business during the Great Recession and Tree and General have managed to hold on to most of that. Family, not so much, for a variety of reasons including lack of investment in physical locations, bad real estate and merchandising fatigue.

Tree is being pressured by investors to do something about its Family problem, either selling it off or otherwise revamping it. This is its first major attempt to address the situation.

We’ll see if it works. While dollar stores collectively continue to expand at insane rates — more than 1,000 stores a year on top of the 30,000 that already exist – and they continue to put local mom and pop retailers out of business, they themselves are being targeted by the big drug chains as well as Aldi. It’s a very competitive space.

One thing is clear: Americans are operating in an economic climate where more than ever the dollar format is appealing….if not necessary to their economic wellbeing.

Here’s my take on the situation from

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