It’s Booming! Part 3: In Defense of Dollar Tree.
A lot of flak has been aimed at dollar stores like Dollar Tree lately. Dollar Tree is set to close some of its Family Dollar stores. The reasons given for the closures vary. Some of the articles say it’s because the acquisition of Family Dollar by Dollar Tree has turned out to be more of a problem than it’s worth. The two stores don’t mesh well together. Still, there are plans to open combo stores where both stores are in the same building. One article I recently read, “Crime magnets, food deserts? US dollar stores in the dock” partially blames lackluster Christmas sales. “Dollar Tree said in March that it planned to close nearly 1,000 of its Family Dollar outlets after poor holiday sales. Discount stores have also struggled with shifts in consumer demand and rising costs.” (Biron, 2024) A different article, “Dollar Tree Raising Some Prices to $7 as 6-Figure Earners Flock to the Discount Store.” said, “Dollar Tree also announced that it is closing 1,000 Family Dollar stores, representing 12% of its total store count. The company also said in the earnings call that it continues to deal with increased theft at Family Dollar, which is only one of many factors behind store closures. As a result, the company has locked up certain products and placed others behind registers.” (Nesbit, 2024)
Either way, it’s clear that the authors of most of the recent articles about Dollar Tree are clearly not fans of Dollar Tree and its ilk. After reading some of these articles, you’d think dollar stores were responsible for the inflation we are experiencing. Most of the authors act like it’s a crime to earn a profit in order to keep your business from bankruptcy and continue to pay your employees. Yes, when Dollar Tree tacked on that additional $0.25 to their prices it did signal that the inflation problem was worse than what the woke media would have you believe. Maybe the propagandists don’t, but I appreciate the position Dollar Tree is in. The business model Dollar Tree had had that worked for years, and they probably expected to continue on indefinitely, no longer works in this high inflation environment. The selling point had been that you could walk into the store and buy whatever you saw there for $1.00 plus any applicable tax. Now that’s no longer possible.
Still, it appears that the propagandists want Dollar Tree to just take the loss — sell the item for less than they can acquire it for in order to hide the fact that there’s an inflation problem. How typical of the woke to steamroll over everything and everyone in order to have their way and then expect someone else to take the pain for it. Heaven forbid they change course when their policies turn out to be a disaster. No, they scapegoat instead.
“While dollar stores use the allure of single-digit prices to bring customers in, they “actually end up costing customers more in the long run,” Sasha Rogelberg said for Fortune. This is especially true for essential products, since “toilet paper, soap, and groceries cost more per unit price at dollar stores than they do as other large retailers.” (Klawans, 2024)
Yes, there are savings to be made buying in bulk — there always has been. It has been a way to get your money to go further. But then, that’s the rub. What if you have to finance your bulk purchases with a high interest rate credit card? Or worse yet, you’ve already tapped out your credit? Then, there becomes a use for a store that sells things in smaller quantities. The problem once again is that it’s not a good thing to be priced out of buying bulk, which can be a way to get financially ahead. But that’s the economic reality we’re in. Some people can no longer afford to invest in a larger quantity in order to gain a discount per ounce or per count. But instead of acknowledging that there is an inflation problem that has led to an interest rate hike on credit, woke propagandists have instead decided to engage in the less than helpful practice of blaming the retailers for not taking the financial loss on themselves by charging bulk prices per ounce or count for smaller quantities. Eventually, undercharging would probably cause them to lose their business since no one is forecasting that the widespread inflationary prices will go back down.
And yet the attack on dollar stores continues with moves even being made to restrict the expansion of dollar stores in some communities. “Critics of these stores, which stayed open during the COVID-19 pandemic to provide essential items and saw swift expansion afterwards, say they attract crime, like shoplifting, are often poorly maintained and push out grocery shops and other businesses. They also say the stores create “food deserts” where consumers have little access to healthy, fresh produce. Supporters say the so-called small box retailers offer a lifeline to low-income families.” (Biron, 2024) The Dollar Tree response was thus: “A spokesperson for Dollar Tree said Chicago’s decision meant it and other small box retailers “will essentially be prohibited from opening new or relocated stores” in the city. The move “will bring more harm than help to the very communities it claims to support by limiting the flexibility to improve stores and provide new offerings to people in these communities,” the spokesperson told Context.” (Biron, 2024)
But the criticism continues … ““This whole thing has exploded,” said Kennedy Smith, a senior researcher with the Institute for Local Self-Reliance (ILSR), which published a report on the “Dollar Store Invasion” last year. As word gets out more about communities that have been successful in controlling dollar store development … others are coming to ask for guidance,” she told Context.” (Biron, 2024) “The closures give communities “an opportunity to re-set the clock and find better ways to ensure that residents have convenient and affordable access to healthy food. With fewer dollar stores, it will be easier for communities to develop or attract better food options,” Smith said.” (Biron, 2024)
Yet, even the author of the “Crime magnets, food deserts? US dollar stores in the dock.” article admits, “there is evidence that the retailers are responding to a genuine demand. The first national survey last year by the non-profit Center for Science in the Public Interest found more than 80% of respondents said the stores helped their communities, were convenient and allowed them to stretch tight budgets.” (Biron, 2024)
But criticism of the dollar store phenomenon persisted in the article: “Broader food access was also highlighted by researchers with UCLA Anderson and the University of Toronto, who found that around one grocery store will close for every three dollar stores that open within a two-mile radius.” (Biron, 2024) And, “In a petition calling for a ban, people in Tangipahoa said they had been negatively affected by the “saturation” of dollar stores, which they said had increased traffic, affected drainage, diminished small businesses and attracted litter and crime.” (Biron, 2024)
The Klawans article is also rife with criticism. “Indeed, while simply shopping elsewhere may seem like an obvious solution, customers “already shopping at dollar stores may not have a choice,” Rogelberg said for Fortune. The “thousands of dollar stores cropping up across the U.S. may seem like a win for shoppers looking for convenience,” but “dollar store expansions have also forced out independent grocers and created food deserts in the areas they occupy.” This means that dollar stores, which are “heavily reliant on cash-strapped shoppers with few options,” have “little motivation to do away with shrinkflation.” (Klawans, 2024)
Still, one woman in the Biron article was willing to work with Dollar Tree in order to remedy the chain’s perceived shortcomings. The article states, “Lorraine Cochran-Johnson, a former commissioner in DeKalb County, Georgia, believes the key to striking a balance between the pros and cons of dollar stores lies in collaboration.” as well as, “Cochran-Johnson drew up legislation to encourage the stores to offer fresh food items, and now many include a cold food section selling milk, cheese and more, she said.” (Biron, 2024)
And yet, you can’t sell those fresh food items for $1.25. So now Dollar Tree is planning to offer items up to $7.00 limit. While most items will still be at the $1.25 price point, others will now range from $1.50 to $7.00. It’s of note that the Klawans article mentions the $7.00 price limit and the shrinking sizes, but neglects to mention that most items will remain $1.25. The Nesbit article mentions, “In the company’s most recent earnings call, executive chairman and CEO Rick Dreiling said the increase was part of Dollar Tree’s “multi-price point strategy” to offer shoppers a more “relevant assortment,” Business Insider reported. He also noted that most of Dollar Tree’s new shoppers in 2023 came from households earning more than $125,000 per year.” (Nesbit, 2024) He also added that “Higher-priced items will include food, snacks, beverages, pet care, personal care and more.” (Nesbit, 2024) Klawans misinterprets the information about the more affluent customers in the following, “And despite what Dollar Tree executives said, statistics show the majority of dollar store customers sit in low-income brackets.” (Klawans, 2024) CEO Rick Dreiling actually said new customers, not all customers.
In the end, apparently Dollar Tree can’t win. When they offer healthier food options for more money the implication is made that the company is catering to the wealthy. If they don’t offer healthier options, the company is a “crime magnet” and a creator of “food deserts.”
It’s also useful to point out that it doesn’t appear that the company is raking in the dough at the $1.25 price point. “The company reported a fourth-quarter net loss of $1.71 billion and a net loss of $998.4 million for fiscal year 2023, Supermarket News reported.” (Nesbit, 2024) Yet, Klawans insists, “The rampant shrinkflation, as in other types of stores, has “resulted in tasty profit margins for both Dollar General and Dollar Tree,” Bill Wilson said for Supermarket News.” (Klawans, 2024) Klawans then seems to contradict himself by pointing out that Dollar Tree is closing stores. “The shrinkflation doesn’t necessarily appear to be helping to avoid other drastic measures; Dollar Tree and its subsidiary, Family Dollar, announced it will close nearly 1,000 stores in the next few years due to a lackluster 2023. While this may help the company, it is “likely to leave a void for Americans with already limited shopping choices,” CNN said. So, which is it? Dollar Tree is a useful resource for the poor and therefore they have a moral obligation to keep their stores open? Or, are they supposedly a scourge that causes “food deserts” by driving out competition? And do we even know there is competition willing to move into these areas? I guess we’ll find out soon if any traditional groceries swoop in to fill that void created by the store closures.
In the end, yes, there is a problem, but the problem isn’t being caused by Dollar Tree.
(Biron, 2024)
Biron, C. (2024, April 22). “Crime magnets, food deserts? US dollar stores in the dock.” Context. https://www.context.news/socioeconomic-inclusion/crime-magnets-food-deserts-us-dollar-stores-in-the-dock
(Klawans, 2024)
Klawans, J. (2024, March 29). “Why are dollar stores a microcosm for America’s shrinkflation problem?” THE WEEK US. https://theweek.com/business/economy/dollar-stores-americas-shrinkflation-problem
(Nesbit, 2024)
Nesbit, J. (2024, March 22). “Dollar Tree Raising Some Prices to $7 as 6-Figure Earners Flock to the Discount Store.” Yahoo Finance. https://finance.yahoo.com/news/dollar-tree-raising-prices-7-201647729.html
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