Family Dollar to close almost 1,000 stores

https://www.nbcnews.com/business/business-news/family-dollar-closing-nearly-1000-stores-where-why-rcna143148

by pg_1234 • 2 years ago

58 86 2 years ago

Dollar tree had too many nearby family dollars. They tried to diversify into groceries vs. home goods but that only went so far. I always figured the two were competitors based on how often both stores would be nearby..

beezle• 2 years ago

"Amid higher costs throughout the economy, consumers have begun shifting to lower-margin goods compared with higher spending on discretionary items earlier in the post-pandemic period."

If Family Dollar is not lower margin I'm not sure what is. My guess is they have mostly lost out to internet sellers and Walmart.

al_borland• 2 years ago

Historically, dollar stores do better during bad times.

I’m wondering if Dollar General is what’s really hurting them. I hear people talk about Dollar General all the time, but almost never Family Dollar. DG seems to be the Walmart of the dollar store game.

kerkeslager6• 2 years ago

Due to rock climbing, I spend a lot of time in poor rural areas (most recently, rural Tennessee).

Dollar General has a few things going for them in these areas:

1. They seem to have very low staffing costs. Most stores seem to have at most 2 workers on staff at a given time (obviously this is higher in busier areas).

2. They seem to have no compunction about putting stores in pretty remote locations (example: [1]). This is probably enabled by having low staffing costs--a store doesn't have to make huge revenue if its costs are low.

3. They seem to have a very standard formula for new stores, which allows them to build them quickly. I've seen a flat lot with trees starting to grow in it, go to an open Dollar General in approximately 9 days. I can't imagine what sort of feats of organizational engineering allows that, but it has to be an advantage because it allows them to pivot into an area quickly. And I would imagine the non-descript buildings are fairly easy to sell, allowing them to pivot out of areas quickly as well.

4. Their competition in remote areas is usually gas stations. While DG isn't cheap compared to Walmart or Aldi, they're often about 2/3 the price of gas stations for a lot of items.

[1] https://maps.app.goo.gl/3gwxaiNRtgqKiKJ28

FredPret• 2 years ago

Dollar stores generally have much higher margins than Walmart or Costco. They're more expensive per unit, but the upfront cash required by the customer is lower.

For this reason (cashflow) they are seen as a good option for poor people, where in reality everyone would be better served by Costco if they had the cash and storage room to buy in bulk, and a car.

_fat_santa• 2 years ago

One thing I noticed about Family Dollar anytime I went into one is their prices were not any better than the local grocery store. You walk into DollarTree and it feels like a dollar store, with Family Dollar there were tons of products I saw where I knew it was cheaper at the local grocery store, and not just cheaper where you would buy a bigger item for more but end up paying less for each unit, but 1-1 products that were more expensive than competitors.

Now if the store was in a rural area with little competition that would be one thing, but this store was in a city where you could walk across the street to a Kroger.

qgin• 2 years ago

Family Dollar occupies a weird space. The successful stores are in locations where other retailers refuse to go. But they sell dollar store quality stuff at (sometimes higher than) Walmart prices.

pers0n• 2 years ago

I hope Aldi gets 1,000 stores soon. Ideally I'd like to see 5,000+ Aldis in the US.

nyjah2• 2 years ago

Not me. Aldi is crap around me. I live in rural area, it's cheap generally way worse quality and we don't need more cheap crap grocery. I know hating on Aldi is unpopular on the internet, but that's been my experience.

cpursley2• 2 years ago

Aldi has a number of high quality and healthy items. They have great prices for things like nuts, jerky, cheese, etc. Just skip the processed stuff like you should in any grocery store.

eugenekolo• 2 years ago

The love for Aldi must be very regional or personal. Because I walk into them and just see knock off snacks such as chips/poptarts, an aisle of rice and pasta, and an aisle of canned food items, and pretty much nothing else in them.

jessepasley• 2 years ago

This reminds me of Aldi from about 25 years ago. Today, I buy most of my diet from Aldi: organic berries, grass fed beef, pasture raised chicken and eggs, etc. All are higher quality than other grocery stores, but much cheaper. I'm guessing this must be regional, which is sad.

AnotherGoodName• 2 years ago

The knock offs seem to be amazing quality in my experience. I go out of my way to buy Aldi brand goods as they are either rebadged mainstream brands or even better.

dan_quixote2• 2 years ago

I walk into them and just see knock off snacks such as chips/poptarts, an aisle of rice and pasta, and an aisle of canned food items, and pretty much nothing else in them

That's the entire point! They have the basics with few options for each type of product. It's not luxurious but it's low stress and inexpensive...exactly what many people want/need.

5555624• 2 years ago

Aldi's is adding 800 stores by the end of 2028 (https://www.grocerydive.com/news/aldi-800-stores-end-of-2028...)

lotsofpulp3• 2 years ago

You should try Winco if you like Aldi. Has everything a grocery store does, but at Aldi prices. Doesn’t even take credit cards (in store), like Aldi used to prohibit.

prirun• 2 years ago

When they were competitors, before the merger in 2015, they built stores next to each other. Rite Aid did the same thing with Walgreens drug stores. Then after the merger, they ended up with redundant stores in the same location. Duh!

https://corporate.dollartree.com/news-media/press-releases/d...

The thing I don't like about these stores is IMO they take advantage of poor people who think they are getting cheaper products, but in many cases, especially for food items, they're paying more. A gallon of milk was $3.50 last time I went to one, whereas it was $1.89 at Meijer. Of course, Meijer does the same thing: if you buy milk at their gas station store, it's also well over $3, but inside the store it's under $2.

People trying to save money would be better off shopping at Aldi IMO, because Aldi doesn't have 5000 kinds of orange juice or paper towels. They have one kind and the price is usually reasonable, whereas the large grocery stores play all kinds of games intended to cause people in a hurry or with limited time or ability to compare products, to choose the wrong thing and pay more.

fires10• 2 years ago

Aldi's or another store is often very far away. I go to them because they are close and available. Most of us know they are more expensive. Time and travel need to be taken into account. Nearest grocery store is a minimum of 25 minutes one way. Family Dollar was 5 minutes away.

abnry• 2 years ago

The thing I don't like about these stores is IMO they take advantage of poor people who think they are getting cheaper products

This only makes sense if you think poor people are dumb or naive. They don't know how to compare prices?

As other people have mentioned, sometimes the value is the amount you can buy. If your personal financial margins are small, it is okay to spend more per oz on a single bar of soap because it is the difference between having soap vs not.

We shouldn't assume cost per unit is the only value a store provides.

duxup3• 2 years ago

This only makes sense if you think poor people are dumb or naive.

I would say ALL consumers are not consistently logical / will make choices that aren't in their best interest.

BriggyDwiggs42• 2 years ago

Poor people have less time, and also worse access to good educations. Stupidity is not required. “Sometimes the value is the amount you can buy” Sure, but on a systemic level we can still see the issue, i.e. that being poor is expensive.

dan_quixote2• 2 years ago

This only makes sense if you think poor people are dumb or naive. They don't know how to compare prices?

I wouldn't go so far as to say "dumb or naive" as we're all susceptible to dark patterns. But the Dollar stores definitely prey on people this way. They have specially sized packages made for many products to make comparison more difficult.

sydd• 2 years ago

This only makes sense if you think poor people are dumb or naive. They don't know how to compare prices?

Its pretty hard when each thing is served in a different size container and it can have different values from the most important ingredient. This is sometimes pretty easy to figure out (e.g. juices usually have the same 2-3 sizes where I live) but sometimes its practically impossible to know whats the best value for money, e.g. paper towels -- size, number of layers, number of sheets, total length etc are all the parameters that one should consider. Or bring a precision scale?

JoeAltmaier• 2 years ago

Then everybody cheats on size/weight/count. Used to have inspectors (Reagan abolished that?) so now we just trust the manufacturers. The predictable result: creeping size/weight erosion.

Mistletoe• 2 years ago

I do know a lot of poor people and they are actually extremely financially dumb and naive. They do not know how to compare prices per unit of measure. They do think the dollar store is cheap. They did have a goal of not using DoorDash for a month because their addiction is so bad. They will DoorDash fast food because they are too lazy to go pick it up.

babypuncher2• 2 years ago

These places create food deserts, for the reason you mention. They are engineered to get poorer people to come there instead of a normal grocery store. The grocery store in your neighborhood struggles and closes, now you have to drive twice as far to get fresh produce, or go to Family Dollar and buy a week's worth of frozen Banquet meals.

That can't be healthy for any population.

I avoid these stores on principle now, even for things where it makes sense to go to a dollar store.

lotsofpulp3• 2 years ago

I would have thought a certain portion of the population becoming poor enough to want to shop at a cheaper store for lower quality products is what causes a store selling at higher quality products at higher prices to go out of business.

Edit to reply to post below due to posting limit:

The people choosing to shop at the cheaper store are also benefiting, otherwise, they would not have switched from shopping at the higher priced store.

superkuh2• 2 years ago

For the truly poor on food stamps Aldi is not an option. They do not accept food stamps.

t3rabytes• 2 years ago

This isn't true -- all Aldi locations accept SNAP EBT.

https://www.aldi.us/about-us/snap-ebt-payment/

darth_avocado2• 2 years ago

The misconception about dollar stores is that they sell cheaper products. However it’d be cheaper to buy almost anything per unit at Costco. Dollar stores provide a service when they sell the same products but smaller sizes, which makes it easier for people who don’t have enough cash to buy stuff.

onlyrealcuzzo2• 2 years ago

1. Don't have enough cash to buy stuff

2. Don't have enough capacity to eat stuff quickly (single people, small families)

3. Don't have ability to preserve stuff (don't have a full kitchen, maybe not even a refrigerator, maybe live in their car, etc)

4. Don't have the ability to get anywhere else

5. Not everyone "poor" is stupid - some people just want to buy Velveeta Cheese and pay a lot for it, for whatever reason, instead of whatever Aldi is selling.

etc...

I'm growing tired of this idea that everyone "poor" is dumb. The median "poor" person isn't much less intelligent than the median middle class person (and probably upper class for that matter, too).

morkalork• 2 years ago

And also proximity. Costco usually requires a car to get to vs dollar stores that are clustered around public transit.

faeriechangling5• 2 years ago

Costco has a higher income cachet, there’s a reason Charlie Munger adored it so. When you’re living in a 100sqft SRO and walking for your groceries the value of the dollar store is more obvious. Because it’s a STORE for the things you can’t fit at home that is near your home, which sells items in small quantities. The entire dollar store model is many locations and small footprint.

It doesn’t make a lick of sense for them to take their car (???) and drive over to Costco to buy a 12 pack of paper towels that will be lying around for a year or two because it’s technically cheaper per unit.

For all this talk of the poor being exploited I think people grossly underestimate in general how wise the poor is with their money. They don’t have much of it so they have to think hard about how to spend each dollar.

zeroonetwothree3• 2 years ago

Costco is only cheaper if (a) you will always use the full amount of product before it spoils or you no longer need it and (b) the cost of traveling the extra distance and spending more time shopping is lower than what you save on the purchase itself. It's not the case that these are both satisfied for everyone.

bombcar6• 2 years ago

Even if you take Costco out of the picture, Walmart is almost always cheaper for basically everything at a (now more than a) dollar store.

There are a few exceptions (nothing I've found beats their helium balloons, if in stock). But dollar stores are everywhere.

dehrmann• 2 years ago

Being poor is expensive because you can't hit even modest economies of scale.

xtiansimon• 2 years ago

“…easier for people who don’t have enough cash to buy stuff”

Or storage space, or Costco membership, or personal transportation

dawnerd3• 2 years ago

And even then Aldi isn’t always cheaper. They make a ton of money on convenience items, like Soda.

But I do agree, aldi is pretty incredible. Most of the people shopping at my local Aldi are definitely more well off.

c0brac0bra• 2 years ago

We could probably afford to shop somewhere other than Aldi but why would we? It would easily be 20%+ more expensive for most items.

Anything we want that we can't get at Aldi (local items, good BBQ sauce, less popular stuff) we'll make a special trip for.

kerkeslager6• 2 years ago

Another good thing about Aldi is that they let their cashiers sit down.

It's unethical that other grocery chains don't provide chairs for their cashiers.

mc32• 2 years ago

Isn’t sitting less healthy than standing? Though, I agree, there should be stools. I see fatigued old timers at the registers who look like they could use a respit.

johnbellone• 2 years ago

Is "unethical" really the correct word here?

balderdash2• 2 years ago

I had a job where i had to stand in one place all day - definitely hard the first couple of weeks - you adapt (+find comfy shoes), I would have never characterized it as unethical, and its probably a lot healthier...

samstave• 2 years ago

Dollar stores are good for those little on-off random kitchen chotchki, some tin foil, greeting cards, toilet drop ins, basically things that dont need to be 'buy for life' but there is no need to spend regular grocery store prices for that thing you will use rarely - and such.

Never for food.

Oh and now that im older and I need lots of reading glasses - its GREAT for 1$ reading glasses - so now they are scattered all over the place so I am pretty much always within an arms reach of them.

If I break them, its fine - but thats a great use of these stores.

@margalabargala : True - but sometimes I only need a little bit. I dont use very much tinfoil... aside for my Hat Collection... but thats not what we're talking about. Can see some ID?

margalabargala4• 2 years ago

Aluminum foil at the dollar store is about half the price of the supermarket, but you get about a tenth as much.

It's fine if you truly know you'll never need more, but it's not like aluminum foil ever goes bad. Most of the time you're better off spending the extra dollar for 10x as much.

bonyt2• 2 years ago

A couple of good videos about the business of dollar stores with similar takes:

https://www.youtube.com/watch?v=p4QGOHahiVM (Last Week Tonight with John Oliver)

https://www.youtube.com/watch?v=vQpUV--2Jao (Wendover Productions)

zeroonetwothree3• 2 years ago

I'm sympathetic to this view, but ultimately I think it's likely they are providing some benefit (even if their practices aren't 100% ethical) or else consumers wouldn't prefer them so much. I don't like to assume that a huge % of the population is too stupid to make basic choices.

bonyt2• 2 years ago

Honestly, I don't think that assumption is necessary, and I don't think either video suggests it in the slightest.

mattbrewsbytes2• 2 years ago

How is this even remotely Hacker News?

duxup3• 2 years ago

I believe the general rule is that if it is interesting... there ya go.

HN may often be technology focused, but it isn't a requirement.

mattbrewsbytes2• 2 years ago

I think it should be stricter, focused on startups, technology, and related topics. General business news? Whats next - general political news?

jeffbee• 2 years ago

It is necessary to Garry Tan's dream of disrupting the entire American society for the people to believe that everything about the economy is extremely bad.

iancmceachern2• 2 years ago

I find this super interesting.

A big part of HN is business

balthasar• 2 years ago

Family Dollar aggressively lowered the number of employees in their stores leading to disorganized and dirty store locations. It isn't surprising that they are now closing these locations.

mocha_nate• 2 years ago

What’s the opposite of the Colbert bump? That’s basically what John Oliver did here

(Joking of course)

lfmunoz4• 2 years ago

Anyone notice that dollars stores sell few products that are actually a dollar.

diseasedyak• 2 years ago

Every Dollar Tree and Family Dollar that I've been in (and this applies to Dollar General as well, here in the southern US) has had 1, maybe 2, employees working and aisles filled with boxes waiting to be unloaded. A couple employees can't contain any sort of theft, much less help customers and unload all the stuff to put on shelves.

Little reason to be shocked on why their business model isn't working...

iancmceachern2• 2 years ago

They (management) does this deliberately, there are youtube videos on it

Family Dollar to close almost 1,000 stores

Related Stories