Is Dollar Tree becoming the new Walmart? Big brands are coming to discount stores
As one of the fastest growing storefronts in America, dollar stores have been attracting business with more notable household brands like Schick razor and Dunkin’ coffee.
It is almost a given that you’ll find multiple discount stores in every city in America. Dollar Tree and Family Dollar combined have around 16,000 locations, while Dollar General has more than 19,000 nationwide, per Axios.
Brand names are wanting a piece of the profit by creating lower-cost products that can be sold to consumers who are looking for a more affordable product. The well-known mac ’n cheese company, Kraft Heinz Co., is one of many companies that in the last year have created teams to work with discount stores like Dollar Tree.
According to Reuters, “Data provided by Kraft Heinz shows that Dollar Tree’s Family Dollar chain had the second-highest growth in food and beverage sales in the first quarter through February 12, at 14.1%, second to rival Walmart Inc. and surpassing Sam’s Club, Target Corp. and Kroger Co.”
Although profits are high for dollar stores, many people are still against their growth. USA Today published a story in March of this year expressing the pushback that many communities are giving dollar stores, saying they are doing more harm than good.
“In cities, it is common to find dollar stores clustered by the dozen within certain neighborhoods. In rural towns, they typically locate near the only grocery store and often succeed in wiping it out,” a report by the Institute for Local Self-Reliance said.
“One might assume that the dollar chains are simply filling a need, providing basic retail options in cash-strapped communities. But the evidence shows something else. These stores aren’t merely a byproduct of economic distress, they are a cause of it,” the report continued.
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The report found that more than 70 cities have prohibited additional discount stores from being built along with another 50 cities enacting laws that limit discount chains on the number of stores they can build.
“Dollar Tree and Family Dollar complement grocery stores and bring economic development to every community we enter, including helping to alleviate the effects of ‘food deserts’ in urban communities by helping serve those who would otherwise be limited in their access to the basic food items we provide,” Kristin Tetreault, chief communications officer at Dollar Tree, told USA Today.
“Our stores are on average 9,000 square feet, a small fraction of the size of an average grocery store, and we typically account for less than 2.5% of total food sales in our trade areas,” Tetreault said.
As inflation continues to rise, many consumers turn to dollar stores for more cost-effective options. A 2020 report shared by Axios found that dollar stores accounted for only 2.1% of food purchases in 2020.
In order to increase their sales, stores like Dollar Tree are expanding their brand market to become more of a grocery store and less like a grab and go snack station.
