For years, I've wondered how dollar stores could survive this deep discount tactic never realizing how many there were. On Monday, it became clear just how profitable these stores can be when Dollar Tree agreed to buy Family Dollar for the cost of 8.5 million items in its stores...not including tax.
Apparently the move was more about swallowing the competition than expanding business. Though there is no word on layoffs or store closures, it is expected Dollar Tree was making the purchase to cut into losses suffered at the hands of its rival which also includes Walmart and Dollar General -- yes, there is yet ANOTHER dollar store chain.
A check of the store locator function on the company websites found there are more than 60 Dollar Trees, more than 120 Family Dollars and nearly 30 Dollar General stores in the greater Houston area.
And the stores, though they tend to be located in poorer parts of every city, can be found in such diverse neighborhoods here as River Oaks, Tanglewilde, Oak Forest and Garden Oaks. Everybody likes a good deal. Plus, all of these chains have websites where you can buy direct. I guess everybody really is online now.
Despite the names, none of these stores sell everything for $1 or less, instead honing in on discounted household goods, toys and the like. But not only does Walmart sell a ton of discounted stuff, many of these items can be found at drug and grocery stores as well, no doubt seriously cutting into profit margins for all of them.
Family Dollar has seen the worst of it recently closing numerous stores and laying off more than 1,000 employees. We'll see if Dollar Tree can maintain such a significant presence in the market now that one rival is out of the way.