A decade after buying Family Dollar for $8bn, Dollar Tree is selling its onetime competitor for $1bn. The marriage didn't work out: it turns out there wasn't space for both a "strict" dollar store chain (though Dollar Tree now sells things for $1.25) and a "loose" dollar store chain (Family Dollar sells any old junk at any old price) in a world which also contains Dollar General.
In a statement, Dollar Tree said private equity firms Brigade Capital Management and Macellum Capital Management will purchase Family Dollar, with the discount chain slated to remain headquartered in Chesapeake, Virginia. Although both Dollar Tree and Family Dollar cater to low-income shoppers, Family Dollar locations struggled to gain traction, prompting the parent company last year to announce plans to shutter about 1,000 locations. Family Dollar also faces fierce competition from Walmart and other large retailers, while a rat-infested warehouse spurred a slew of negative headlines.
The record vermin-infested warehouse fine can't have helped. Dollar stores grew in popularity when the financial crisis brought on a new era of middle class decline and working class poverty, and boomed when the pandemic hit. But they are now squeezed by Walmart and Target, willing compete on price and able to offer a wider selection of goods.
Previously:
• Ecstacy for under a dollar
• How dollar stores score the highest profit margins
• Dollar Tree's working conditions condemned
• Dollar Tree to change its name to Dollars Tree. (Well, they should anyway.)
• Failing dollar stores blame shoplifters. No-one's buying it anymore.
