- Dollar General and Dollar Tree plan to open over 1.3K new locations in 2024, despite facing slowing sales and weaker earnings.
- Competition from Walmart, Target, and growing e-commerce demand has impacted the low-income customer base discount stores rely on.
- Both chains are expanding their retail footprints as they experiment with limited online offerings and partnerships like Instacart and DoorDash.
Despite declining sales and intensifying competition, Dollar General (DG) and Dollar Tree (DLTR) are continuing to expand their national footprints, with plans to open over 1.3K new locations this fiscal year, as reported in WSJ.
The push for expansion comes as Dollar General and Dollar Tree grapple with slower spending among their core low-income customers and the growing shift toward e-commerce.
Stiff Competition
While Dollar General and Dollar Tree historically thrived on value and convenience, they face growing pressure as consumers increasingly favor online shopping.
Big-box rivals like Walmart (WMT) and Target (TGT) have enhanced their online shopping and delivery services. Of course, there’s also Amazon (AMZN), which has strengthened delivery in rural areas where dollar stores previously dominated.
Limited E-Commerce Efforts
Both Dollar General and Dollar Tree have also been slow to develop robust e-commerce platforms.
While they have made small strides, such as offering Instacart delivery for Family Dollar and DoorDash partnerships for Dollar General, these efforts are limited compared to big-box rivals.
Local Struggles
Dollar stores are also struggling with operational issues, including cluttered aisles, understaffing, and retail theft in urban areas.
While efforts to improve customer experience are underway, challenges remain, especially as the companies continue to prioritize new store openings over refining existing operations.
Core Customers Spend Less
On top of that, the core low-income customer base discount stores rely on is spending less due to ongoing economic pressures.
Dollar General relies heavily on households with incomes under $30K, and slower spending in this demographic is impacting sales.
Meanwhile, Dollar Tree has reported pullbacks from higher-income customers, further straining performance.
Looking Ahead
Despite these challenges, both companies remain committed to opening new stores as a primary growth strategy.
Dollar Tree, in particular, is repurposing leases from bankrupt 99 Cents Only Stores, while Dollar General is focusing on expanding into rural areas, betting that physical presence will remain a key competitive advantage.xpected to provide some relief for renters, though the regional imbalances suggest that rent pressures will continue in certain areas.
