Dollar Tree faces crisis, sells Family Dollar for $1 billion

In the United States, discount stores like Family Dollar experienced a drastic decline after initially thriving during recent years. Dollar Tree, which previously acquired Family Dollar in 2015, has decided to sell its subsidiary for just $1 billion, significantly lower than its initial purchase price, due to worsening financial circumstances and stiff market competition. Inflation and the cutting of pandemic-era aid have adversely affected low-income shoppers, reducing their spending capabilities in both dollar stores and traditional grocery chains alike. Throughout the pandemic, discount stores enjoyed widespread patronage from low-income Americans as they offered affordable pricing and accessible locations. However, competition from major retailers like Walmart grew increasingly fierce. Dollar General executives acknowledged that Walmart's success significantly impacted their sales, creating an ongoing cycle of cannibalization between the two types of stores. Moreover, reports of violence at these discount chains indicate additional challenges. Over 200 violent incidents tied to Family Dollar and Dollar General have been reported from 2017 onwards, attributed partly to their high density in low-income areas where these stores are commonly found. Therefore, the concern about safety may deter customers from visiting these stores, further contributing to their declining business performance. With inflation and decreased consumer spending continuing to erode profits, many analysts are questioning the future viability of discount chains like Family Dollar. As consumers increasingly shift to online shopping, Dollar Tree and similar retailers may struggle to maintain their market share unless they adapt accordingly to the evolving retail landscape.