Family Dollar and Dollar Tree will close their stores

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New York CNN —Family Dollar, the struggling discount chain that caters to low-income customers predominantly in cities, said Wednesday it will close nearly 1,000 stores.
Years of mismanagement and poor conditions in stores have hurt Family Dollar’s brand.
Family Dollar, which is owned by Dollar Tree, was recently fined more than $40 million for a rat infestation at a warehouse that forced hundreds of stores to temporarily close.
Decades-high inflation has hit shoppers hard, and a general consumer pullback has impacted Family Dollar customers and the chain’s profits, exacerbating its battle with discount competitors such as Dollar General, Walmart and others.
In addition, the reduction in benefits for the Supplemental Nutrition Assistance Program, or SNAP, has left struggling families with as much as $250 less per month.
Discount stores and consumer goods companies say they have felt the impact of that loss.
“Persistent inflation and reduced government benefits continue to pressure the lower-income consumers that comprise a sizable portion of Family Dollar’s” customer base, CEO Rick Dreiling said Wednesday on a call with analysts.
Family Dollar will close 600 locations this year and 370 stores over the next several years as store leases expire.
Family Dollar has around 8,000 US stores.
Dollar Tree also said it will close 30 stores as leases expire.
The closures will improve the company’s profitability.
But they are likely to leave a void for Americans with already limited shopping choices.
Family Dollar stores are often in areas with few supermarkets, big box stores and other retail options.
Shares of Dollar Tree sank more than 13% to their lowest level this year in early trading Wednesday.
Understaffed and hazardous storesDiscount retail has been one of the bright spots in the industry, dating back to the Great Recession, when the economic downturn and high unemployment meant Americans hunkered down, forcing retailers to slash prices to survive.
Years of bargain hunting has conditioned shoppers to look for discounts instead of paying full price, a mentality that remains to this day.
So, while thousands of department stores, speciality stores in malls and other retailers have closed, discount companies ranging from Walmart to Dollar General to TJ Maxx have grown.
These companies have focused on appealing to the shrinking middle class and lower-wage shoppers searching for low prices.
As many shoppers have been squeezed by the highest level of inflation in decades, discount chains have improved their position.
But Family Dollar has missed out.
Dollar Tree, which focuses more on middle-income shoppers in suburbs, bought Family Dollar in 2015 for $8.5 billion.
The combined company hoped that by joining forces, it could grow its customer base, reduce costs and fend off bigger retailers like Dollar General, which is mainly in rural areas.
But Dollar Tree has struggled to integrate Family Dollar and has closed hundreds of stores in recent years.
Family Dollar stores were in worse condition than Dollar Tree expected when it acquired the business, analysts say.
Even though Family Dollar has renovated thousands of stores in recent years, many stores are still poorly maintained.
Stores are often understaffed and boxes block aisles.
Family Dollar, Dollar Tree, Dollar General and other discount stores have had longstanding theft issues, operating stores with just a handful of employees who have at times been victims of violent robberies and other crimes.
Dollar Tree employees have complained about unsafe working conditions, and OSHA last year criticized the company for a “continued disregard for human safety” that “suggests the company thinks profits matter more than people.”Family Dollar was hit with a record fine this year for violating product safety standards after selling items that were stocked in a rat-infested warehouse in West Memphis filled with live, dead and decaying rodents.
The $41.6 million fine was “the largest-ever monetary criminal penalty in a food safety case,” the Justice Department said.
Last year, Dollar Tree announced it would review its entire portfolio of Family Dollar stores to identify underperforming locations.
Dollar General boomingAs Family Dollar struggled, rival Dollar General boomed.
Dollar General has opened about 1,000 stores a year, making it the fastest-growing retailer in the United States.
The company has around 18,000 stores.
The companies are battling for many of the same low-income shoppers.
Despite the name, these stores sell mostly food and everyday items for between $1 and $10.
But Family Dollar has lost ground to Dollar General, in particular due to prices: Family Dollar’s prices can be 10% to 15% higher than Dollar General’s and other discount competitors.
Dollar General, which is more than double the size of Family Dollar, can offer lower prices because of its scale.
Shoppers have shifted to Dollar General, Walmart, Target and other low-priced chains to stretch their budge

CNN’s New York —.

The struggling discount retailer Family Dollar, which primarily serves low-income urban customers, announced on Wednesday that it would be closing almost 1,000 locations.

Family Dollar’s brand has suffered from years of poor management and store conditions. Recently, a rat infestation at a warehouse forced hundreds of Family Dollar stores to temporarily close, costing Dollar Tree’s parent company more than $40 million in fines.

The chain’s struggle with discount rivals like Dollar General, Walmart, and others has been made worse by decades of high inflation, which has severely hurt consumers and affected Family Dollar’s customer base and financial results.

Furthermore, low-income families now receive up to $250 less per month as a result of the Supplemental Nutrition Assistance Program, or SNAP, benefit reduction. Companies that manufacture consumer goods and discount stores claim to have been affected by this loss.

In a conference call with analysts on Wednesday, Family Dollar CEO Rick Dreiling stated, “Persistent inflation and reduced government benefits continue to pressure the lower-income consumers that comprise a sizable portion of our customer base.”.

Due to store leases expiring, Family Dollar will close 600 locations this year and 370 locations over the following few years. Family Dollar has about 8,000 locations in the US. Additionally, Dollar Tree announced that 30 of its locations will close as their leases expire.

The business will be more profitable as a result of the closures. But for Americans who already have few options when it comes to shopping, they will probably leave a gap. Family Dollar stores are frequently found in areas with limited access to big box stores, supermarkets, and other retail establishments.

In early trading on Wednesday, Dollar Tree shares fell more than 13 percent to their lowest point of the year.

stores with inadequate staffing levels and potential hazards.

Since the Great Recession, when Americans hunkered down due to the economic downturn and high unemployment, discount retail has been one of the industry’s bright spots, forcing retailers to slash prices to survive.

Experiencing years of shopping for deals have instilled in consumers the mindset to search for lower prices rather than paying full price.

Discount retailers like Dollar General, TJ Maxx, and Walmart have expanded, while thousands of department stores, specialty shops in malls, and other retailers have closed. These businesses have concentrated on targeting the declining middle class and low-wage consumers looking for deals. Discount chains have strengthened their position as the greatest rate of inflation in decades has squeezed many shoppers.

However, Family Dollar has been overlooked.

Family Dollar was purchased by Dollar Tree in 2015 for $8.5 billion; Dollar Tree targets primarily middle-class suburban consumers.

The merged business believed that by working together, it could increase its clientele, cut expenses, and compete with larger, mostly rural retailers like Dollar General.

However, Dollar Tree has had difficulty integrating Family Dollar and has recently had to close hundreds of locations.

Analysts claim that when Dollar Tree bought the company, family dollar stores were in worse shape than they had anticipated. Many Family Dollar locations are still in disrepair, despite the company having renovated thousands of locations in recent years. Boxes obstruct aisles and stores frequently lack employees.

Discount retailers like Family Dollar, Dollar Tree, Dollar General, and others have long struggled with theft; their small staffs have occasionally been the targets of violent robberies and other crimes.

OSHA censured Dollar Tree last year for a “continuing disregard for human safety,” which “suggests the company thinks profits matter more than people.” Employees have long complained about unsafe working conditions at the store. “.

Family Dollar sold goods that were kept in a West Memphis warehouse teeming with dead, alive, and decaying rodents, and as a result, the store was hit with a record fine this year for breaking product safety regulations.

As per the Justice Department, the $41.6 million fine represented the highest criminal penalty in a food safety case to date.

In order to identify underperforming locations, Dollar Tree announced last year that it would review every Family Dollar store in its portfolio.

Dollar General is expanding.

Dollar General, a rival, flourished while Family Dollar faltered.

Growing at the fastest rate in the US retail industry, Dollar General opens roughly 1,000 new locations annually. The business operates about 18,000 stores.

Many of the same low-income customers are the target market for the competing companies. In spite of their name, the majority of the products sold in these stores range from $1 to $10 and are food-related.

However, Family Dollar has fallen behind Dollar General, especially when it comes to prices. Compared to Dollar General and other discount competitors, Family Dollar’s prices can be as much as 10% to 15% more. Due to its size, Dollar General, which is more than twice as big as Family Dollar, is able to provide lower prices.

In order to stretch their budgets, customers have shifted to low-cost chains like Dollar General, Walmart, Target, and others.

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