Why Dollar Tree is struggling while Dollar General thrives
Why Dollar Tree is struggling while Dollar General thrives
Dollar General has reported sales and profit better than Wall Street expected, and last week forecast strong sales for 2024, saying consumers are looking for lower-priced goods in the face of higher prices and continued inflation.
Contrast that with Dollar Tree, which forecast last week that its 2024 sales will be weak, and said it’s closing nearly 1,000 of its Family Dollar stores nationwide. Both chains face stiff competition from Walmart and Chinese online retailer Temu, which are going after the Dollar-ish stores’ customers by aiming down-market. Dollar General appears to be doing better at hanging on than Dollar Tree, in part by beefing up some of its food and grocery offerings.
At Dollar Tree, “It’s been a rather dreary experience to go into the store for some time,” said Zak Stambor at eMarketer.
Whereas at Dollar General, Stambor said, stores have been “adding freezers and refrigerators, stocking more fresh produce.”
This move is a strategic appeal to frugal low- and middle-income consumers who “want to go one-stop shop, find better value, better bang for my buck,” said Marshal Cohen at market research firm Circana.
This fits into Dollar General’s strategy — draw customers in with discount groceries, encourage some discretionary splurging on items like “cheap clothing, inflatable balloons, toys,” according to Stambor.
All of which are higher-margin items that boost the bottom line.
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