Dollar Stores Vie to Replace 1,000 Family Dollar Closures

Dollar Tree is in the works to close nearly 1,000 stores in the next year or so and it can blame recent economic headwinds’ effects on its customer base as a prime reason.

A recent report from Placer.ai evaluated which discount dollar stores could fill the gap left by these closures based on customer demographics.

Major players like Dollar General and the Dollar Tree banner can fill the voids left by shuttering Family Dollar venues. Walmart also may step into some of the newly created gaps.

Dollar Tree is one brand that has thrived during the segment’s rise in traffic. Visits to the industry increased by 25.4% in Q1 2023 and were up 55.8% in Q4 2023 relative to pre-pandemic Q1 2019.

“But this growth seems to have bypassed Family Dollar,” according to the report, which found Q1 2023 visits to Family Dollar rose by just 0.8% and traffic during the critical holiday-driven Q4 2023 was up just 9.8% since Q1 2019.

Dollar Tree, meanwhile, outperformed the wider industry during the same period, with a 28.4% increase in Q1 2023 visits and a 72.1% increase in Q4 2023 visits relative to a Q1 2019 baseline.

Shopping times for Family Dollar and Dollar General customers didn’t match those of Dollar Tree and Walmart, however. For Family Dollar and Dollar General, they received about 37% of their daily visits between 5 pm and 8:59 pm while Dollar Tree (31.2% of visits) and Walmart (34.3%) drew customers during the late afternoon and evening.

Family Dollar customers’ median household income is closer to Dollar General than to Walmart or Dollar Tree.

Its potential market median HHI of $62.1K and a captured market median HHI of $48.3K are the lowest trade area median HHI of the four chains analyzed.

All four chains appealed to rural shoppers and Placer.ai found that Family Dollar’s rural shoppers are visiting Walmart or Discount & Dollar Stores.

“These other retailers may choose to open in areas where Family Dollar is closing and where no other discounter currently operates,” it said.

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