Warren Shoulberg of The Robin Report reports that despite inflation, the dwindling middle class is not necessarily trading down to dollar stores the way they used to. He writes:
Let’s play a little Dialing for Dollars; the big picture is about Dollar Tree closing. Today’s question is: Why did Dollar Tree decide to close 1,000 of its Family Dollar and Dollar Tree locations? It may be a trick question and the answer is rather complicated. See if you can get the right one:
- It is the fallout from a deal almost ten years ago that Dollar Tree thought it won…but turned out to have lost big-time.
- It reflects the fact that this economy is very complex, and the hardships being felt by customers are very different than in previous downturns.
- It’s about a management that should have known better and doesn’t rank on a par that well with the performance of its main competitors.
- All of the above.
And the answer is? D, all of the above. We told you it wasn’t going to be easy. […]
The entire dollar category may not be retail’s shining star right now – in fact, who is outside of Walmart, Costco and the off-pricers? But there are distinctions within the channel. All dollar stores are getting hit on many sides, not just from each other, but from the Chinese-founded Shein and Temu direct selling twins, from real deep discount off-pricers like Ollies and national drug chains like CVS and Walgreens that continue to expand their assortments into consumables like food and household goods. Those retail lines are blurred but Dollar Tree is not doing itself any favors by trying to compete with them these days. The buck seems to be stopping there.
Read more here.
