Why is Family Dollar closing its stores? Reason explored as Dollar Tree-owned retailer chain announces closure of nearly 1,000 locations

Dollar Tree has made the decision to close more than 1,000 stores all over the country. As per CNN, Family Dollar announced the same on Wednesday, March 13, 2024, and stated that more than 600 Dollar Tree stores will be closed in the first half of 2024, and the rest of the 370 stores are to be shut over a few years. The rest 30 stores will be shut as soon as their license expires.

At the same time, the retailer chain mentioned that the main reason behind the closure of these stores is the mismanagement and the poor conditions of the stores.

Furthermore, Family Tree was also slapped with a $40 million fine for rat infestation. Moreover, another big reason for the stores shutting is the customer pullback, as it has been disturbing the profits of the chain.

Having more than 8,000 stores in the US, Dollar Tree announced that its shares sank more than 14% this year, forcing it to take some action to avoid further losses. Rick Dreiling, the Chairman and CEO of the chain said:

“We finished the year strong, with fourth quarter results reflecting positive traffic trends, market share gains, and adjusted margin improvement across both segments. While we are still in the early stages of our transformation journey, I am proud of what our team accomplished in 2023 and see a long runway of growth ahead of us.”

---

Dollar Tree also suffering because of reduction in the Supplemental Nutrition Assistance Program

Apart from other reasons like a hefty fee due to rats inside the stores, and inflation, the retailer also mentioned that since the time the government reduced the benefits for the Supplemental Nutrition Assistance Program, families with low income are spending less at discount stores like Family Dollar and Dollar Tree.

CEO Rick Dreiling also addressed the same and said:

“Persistent inflation and reduced government benefits continue to pressure the lower-income consumers that comprise a sizable portion of Family Dollar’s.

Other reasons could be the worsening conditions of the stores, because of low or no maintenance. Even though many Dollar Tree stores have been renovated, they remain poorly maintained, which takes away the shopping experience, resulting in low footfall.

On the other hand, the competitors of the retailer chain, like Dollar General and Walmart are also blooming at the moment, resulting in a loss for Dollar Tree.

With Dollar General opening more than 1,000 stores in the country, it has conveniently become the fastest-growing retailer in the country.

Experts have mentioned that many customers have reported the price of Dollar General being 10-15% lower than Dollar Tree, hence making it more popular amongst the masses.

Talking about its sales, profits and losses, as per Today, the chain has incurred a loss of $1.71 billion. However, the stores are expecting the sales of 2024 to be between $31 billion and $32 billion, with the share rate going back to $7.3.

However, CNN mentioned how experts have predicted that the possible shutdown of 1000 stores could lead to the profitability of the chain. However, at the moment, the location of these stores shutting down has not been specified.