Major Discount Chain Faces Nearly 1,000 Store Closures

By: David Donovan | Published: Aug 22, 2024

In the coming years, Dollar Tree, a variety discount chain, will close nearly 1,000 locations in response to financial difficulties.

Following a review of its performance during the 2023 fiscal year, Dollar Tree has announced that it will be closing close to 1000 Family Dollar and Dollar Tree locations.

“Comprehensive Store Portfolio Optimization Review”

The business cited a “comprehensive store portfolio optimization review” in an announcement made on Wednesday, pointing to the necessity of closing stores due to significant underperformance last year.

Dollar Tree, 1547 N Express Way, Griffin, Spalding County, Georgia. The building is sandstone colored with red brick accents, there are cars parked outside and people entering the store.

Source: Michael Rivera/Wikimedia Commons

“Identifying stores for closure, relocation, or re-bannering based on an evaluation of current market conditions and individual store performance, among other factors” was the goal of the audit.

Unable to Meet Sales Targets

It likewise recognized the chain’s underperformance, including the inability to meet sales targets in 2023. Dollar Tree shares have dropped by 14.2% since the announcement.

Dollar Tree store in Northwood, Ohio is one of the few stores that continues to use the defunct Super Dollar Tree banner. There are cars parked outside of the grey building and some snow on the ground as people enter the store.

Source: Niceckhart/Wikimedia Commons

The statement went on to say, “We took a thoughtful and deliberate approach to address underperforming stores by considering each individual store’s performance, local operating environment, and our broader need for scale and operating efficiencies across the portfolio”

Closure Figures

The company intends to close approximately 600 Family Dollar stores across the first half of 2024. Over the next few years, it will close 370 Family Dollar stores and 30 Dollar Tree stores.

Interior of a Dollar Tree in Gillette, Wyoming. There are shelves of products lining the store including stationary, flowers and a fridge

Source: Mr. Satterly/Wikimedia Commons

Nearly 12% of all Family Dollar stores will close as a result of these closures. Up to this point, specific details of store closures have not been delivered.

Family Dollar Acquisition

Dollar Tree has been forced to close 17,000 locations across the United States and Canada as of February 2024.

Family Dollar, 3820 Inner Perimeter Road, Valdosta, Lowndes County, Georgia. The sandstone colored building has brick accents, there are cars parked in front of the building and trees behind it.

Source: Michael Rivera/Wikimedia Commons

Family Dollar was acquired almost a decade ago by Dollar Tree, which has been one of the leading discount variety stores in the United States for more than 30 years.

Struggling to Incorporate

Dollar Tree has struggled to successfully bring Family Dollar under its wing ever since it won the bidding war in 2015 against major competitor Dollar General.

Exterior of a Dollar Tree store in Hillsboro, Oregon. The sign is lit up at night with the lights visible on inside the store.

Source: M.O. Stevens/Wikimedia Commons

The acquisition by Dollar Tree has been viewed as a massive failure by many experts as a result of these closure announcements, including GlobalData managing director Neil Saunders.

Expert Opinion

In a public statement, Saunders wrote, “This dramatic cull is the coup de grace in the rather botched acquisition of the Family Dollar chain, which has caused Dollar Tree nothing but hassle since it was completed back in 2015.”

The exterior of a Dollar Tree store in Sudbury, Ontario. The sandstone colored building has cars parked in front of it and a person walking on the sidewalk, the sign has a Canadian maple leaf next to it.

Source: Notsammyray/Wikimedia Commons

He went on to say, “Basically, almost 10 years on, Dollar Tree is still sifting through the mess it inherited and has not been able to completely turn around.”

Rat Problem

One of the many significant issues the U.S. chain has encountered in recent years was their failed acquisition of Family Dollar. The most well-known, however, is a significant rat infestation that cost them tens of millions of dollars.

A brown and white rat in a cage looking upwards, there is another rat partially visible beside it, the cage is green and has bedding in it.

Source: Kylie Anderson/Unsplash

The company had been shipping products to its outlet stores from an Arkansas distribution center that was rat-infested up until January 2022.

Infestation Causing Losses

In court, the company was ordered to pay $41.6 million for one misdemeanor count. They later revealed that the infestation also caused Dollar Tree to lose up to $34 million in recalled goods.

A man holding a dossier speaking with two women, one holds a coffee cup, there are other people sitting down with just their heads visible.

Source: OSHA_DOL/X

Additionally, the Occupational Safety and Health Administration (OSHA) issued a damning statement regarding the situation, claiming that the company had an “attitude that profits matter more than people” and had “continued disregard for human safety.”

Rival Expansion

In addition, their main rival Dollar General is expanding rapidly, opening over 4,000 new locations in the last five years and adding fresh produce to their product line.

A Dollar General sign on a post next to electricity wires on a lawn, there are trees in the background, the sky is clear.

Source: DollarGeneral/X

Low- and middle-income earners are increasingly frequenting discount variety stores as a result of the rising cost of living and household debt.

Rising Retailers

Dollar stores are the nation’s fastest-growing food retailers, according to a January study in the American Journal of Public Health.

Entrance to Tisch Library, the main library on Tufts University campus, the building is grey with rows of windows, there is a person sitting outside of it.

Source: HereToHelp/Wikimedia Commons

Wenhui Feng, a Tufts University professor of healthcare policy who co-authored the paper, stated, “Dollar stores play an increasingly important role in household food purchases, yet research on them is lacking.”

Current Operations

Currently, the company operates 15,115 stores across the 48 contiguous U.S. states and Canada.

99 Cents Only Store in Dallas, the building is white with brick accents, there are cars parked outside and people entering the store.

Source: strangelv/Flickr

Their operations are supported by a logistics network spread across the nation of 24 distribution centers.

The increased struggles for the brand come as they announced in May that they had acquired up to 170 closed 99 Cents Only locations that they intend to reopen this fall.