Dollar Tree announced on March 13 it would close 600 Family Dollar stores in the first half of fiscal 2024, and 370 additional stores as their leases expire, according to a press release.
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“Persistent inflation and reduced government benefits continue to pressure the lower-income consumers that comprise a sizable portion of Family Dollar’s customer base,” CEO Rick Dreiling said on a call with analysts, according to the transcript. The company didn’t specify where the locations of the store closings will be. GOBankingRates reached out to Dollar Tree, but hasn’t heard back yet.
Family Dollar acquired Dollar Tree in 2015, and has 8,415 Dollar Tree and 8,359 Family Dollar stores as of February 2024, according to Securities and Exchange Commission (SEC) filings.
While inflation is slowly abating — standing at 3.2% according to the latest Consumer Price Index (CPI) released March 12 — it has been taking a toll on consumers’ wallets for a few years. And grocery prices are up 2.2% for the year.
Another factor that contributed to the closings, as CNN noted, is the reduction in benefits for the Supplemental Nutrition Assistance Program (SNAP), which has hurt many families with as much as $250 less per month.
How will this affect consumers?
The decision “is effectively Family Dollar running up the white flag of surrender in the value grocery battle,” GlobalData managing director Neil Saunders wrote, according to Axios. This consumer battle has seen Walmart, Aldi and Dollar General — Family Dollar’s competitor — advancing, Axios added.
The closings might affect many consumers, as bargain hunting has conditioned consumers to search for discounts instead of paying full price, according to some experts.
“With the cost of living rising and inflation, finding quality products at a discount remains a top priority for families who need to stretch their dollar,” said Amanda Stein, founder of Ellis Stein Group. “While the Dollar Store closures will improve profitability for the store, it will leave a void for Americans with already limited budgets and shopping choices for essentials.”
In turn, Stein said the result will likely be consumers choosing Walmart, Target and other value-based brands and merchants to stretch their dollar.
Interestingly, CEO Dreiling said on the March 13earnings callthat Dollar Tree alone added 3.4 million new customers in 2023, mostly from households earning over $125,000 a year.
Meanwhile, rival Dollar General announced in January that it was offering fruit and vegetables in 5,000 stores. And as the Washington Post reported, the chain has been growing rapidly, with 4,000 locations new in the past five years, opening its 20,000th store last month.
This article originally appeared on GOBankingRates.com: How Dollar Tree and Family Dollar Stores Closing in 2024 Will Affect Consumers
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