Dollar Tree seeks a buyer for the North Carolina-founded Family Dollar franchise, leaving the future uncertain for shoppers relying on its affordable goods.
The potential split raises questions about what will happen next for customers who depend on the low prices offered by these stores.
Dollar Tree Plans to Unload Family Dollar Amid Ongoing Struggles
Dollar Tree, a Virginia-based company, acquired Family Dollar for $8.5 billion in 2015. Three years after the acquisition, in 2018, Family Dollar's headquarters in North Carolina was closed, according to The Fayetteville Observer.
Dollar Tree has encountered difficulties in merging Family Dollar into its business structure. Recently, the company declared its intention to sell Family Dollar. However, other options, such as spinning off or disposing of the stores and brand, are also being considered. The future of Family Dollar's 459 stores in North Carolina remains unclear.
Economics professor Matthew Metzgar from UNC-Charlotte shared with Carolina Public Press, as reported by AOL that Dollar Tree faced challenges in achieving effective collaboration with Family Dollar.
Dollar Tree serves suburban areas with higher prices, while Family Dollar focuses on low-income, urban areas, making integration difficult.
In February, a rat infestation at a Family Dollar warehouse in Arkansas resulted in a $41.7 million fine and nearly 1,000 store closures. Family Dollar reported a $2.6 billion loss in 2023.
Dollar Tree CEO Rick Dreiling said the company aims to grow the Dollar Tree brand by offering higher-priced products and opening new stores, including 170 acquired from the bankrupt 99 Cents Only chain.
Dreiling noted that the differing needs of Family Dollar and Dollar Tree have prompted a review of strategic options for Family Dollar.
Also Read: Walgreens Customers Face Uncertainty as Store Closures Loom Nationwide
Uncertainty for Shoppers as Family Dollar Faces Potential Sale
Family Dollar's future is uncertain as analysts predict a private equity group might purchase the chain, split it into smaller groups of stores, and sell them off. The brand's survival and the impact on public health remain unclear, as Carolina Public Press revealed.
North Carolina and nationwide communities increasingly rely on dollar stores like Family Dollar, Dollar Tree, and Dollar General for basic needs.
A 2023 American Journal of Public Health study found that dollar stores are the fastest-growing grocery retailers, especially in rural, low-income Southern areas. Household spending on dollar store food in rural areas more than doubled between 2008 and 2020.
However, this growth has downsides. UNC-Charlotte economics professor Matthew Metzgar noted that dollar stores tend to reduce sales at local independent grocery stores, limiting options for fresh produce and meat.
Dollar stores primarily offer processed and packaged foods, which are higher in calories and lower in nutritional value, potentially increasing obesity and diabetes rates in low-income areas.
Sean Cash, an economist at Tufts University, highlighted that the dollar-store business model started in the South, where it has strong consumer support and more distribution centers.
Family Dollar employed thousands in the Charlotte area and had a local board until Dollar Tree bought it in 2015. Though jobs moved to Virginia, North Carolina consumers stayed loyal, even after 14 state locations were fined in April for overcharging customers.
Low-income communities, more affected by rising grocery prices, find Dollar Tree and Family Dollar affordable compared to major grocery chains, despite Dollar Tree's 25% price increase in early 2022.
If Family Dollar closes some or all stores, North Carolinians might lose access to low-cost food options, potentially expanding food deserts nationwide.
Related Article: Dollar Tree's $3 Storage Bins See High Demand, Compete Closely With Target's Higher Priced Alternatives
