Dollar General is busy opening stores here, while rival Dollar Tree is busy closing nearly a thousand Family Dollar stores.

Dollar General is busy opening stores here, while rival Dollar Tree is busy closing nearly a thousand Family Dollar stores.

Dollar Tree plans to close 600 Family Dollar stores in the first half of this year, and will close another 370 Family Dollar stores and 30 Dollar Tree stores in the next few years, bringing the total number of store closures to 1,000. Ongoing inflation has put pressure on Family Dollar's core customer base, causing the company to swing from profit to loss last year. Although Dollar Tree's sales increased, its overall performance was still dragged down by underperforming Family Dollar.

The measures to reduce the size of Family Dollar have been recognized by some industry insiders. In a budget retail market with fierce competition and low growth potential, closing underperforming stores is undoubtedly a wise choice. In addition, Family Dollar’s core customers lack loyalty and basically buy from whomever gets the cheaper price. A considerable part of them are low-income and dependent on government welfare groups. Their purchasing power is not strong, and it is difficult for shops to make money.

In comparison, the Dollar Tree segment added 3.4 million new customers in 2023, mostly from households earning more than $125,000 a year. This shows that despite the challenges, Dollar Tree still has the potential to attract a wider customer base. The company plans to increase product categories and price ranges by continuing to expand its multi-price strategy to meet the needs of different customers.