Shoppers Seek Deals, but Dollar General and Dollar Tree Miss Out

Dollar Stores Struggle as Economic Pressures and Competition Mount

As shoppers look for value, dollar stores might seem like a natural choice. However, this cost-conscious mindset hasn’t been enough to boost sales for Dollar Tree and Dollar General, which are facing significant challenges.

Both retailers have slashed their 2024 forecasts due to underwhelming sales, and their stock prices have plunged over 40% this year, contrasting sharply with the S&P 500’s 26% gain. Leadership shakeups have added to the turmoil: Dollar General parted ways with CEO Jeff Owens in October, while Dollar Tree’s CEO Rick Dreiling stepped down in November. Additionally, Dollar Tree is exploring the sale of Family Dollar, its grocery-focused subsidiary.

Once Wall Street favorites, dollar stores are under pressure as inflation hits their core customers—low-income households—particularly hard. Their business models, built on lean staffing and low operating costs, have resulted in messy stores and a diminished customer experience. Meanwhile, competitors like Walmart and Amazon have captured market share with robust e-commerce and value-focused strategies.

Dollar Tree and Dollar General have relied on aggressive store expansion, with over 36,000 locations between them. However, the broader economic environment and rising competition have exposed weaknesses. Family Dollar, a struggling segment of Dollar Tree, is closing about 1,000 stores, while Dollar General’s Popshelf concept aimed at higher-income shoppers has yet to gain significant traction.

Operational challenges compound these issues. Both companies have faced hefty fines for workplace safety violations and poor store conditions. Such reputational hits, coupled with inflation-driven price increases, have alienated customers.

Though Dollar General is launching holiday promotions and Dollar Tree continues to experiment with multi-price points, it’s clear both brands face an uphill battle to regain their footing in an increasingly competitive retail landscape.