The 2020s have seen two major discount retail chains, Dollar General and Family Dollar, end up in a rash of store closings across the nation. For both chains, this comes as a surprise after their strong growth in the years leading up to 2020. In an industry that was already saturated, these major closures indicate changes in the broader retail landscape.
Background on Dollar General and Family Dollar
Dollar General and Family Dollar have long been important players in the discount retail field. Both chains specialize in selling a wide array of low-cost items. However, their response to the changing face of the discount retail industry differs.
Dollar General was established in 1939 and has been a major industry leader since then. It is currently the largest discount retailer in the U.S., with over 17,200 stores across the country. Dollar General is known for its focus on affordability, offering customers a wide selection of products for under $1. Dollar General has also seen tremendous growth throughout the years, with the company opening three new stores per day in recent years.
Family Dollar, on the other hand, was established in 1959 and has since become one of the largest discount retail chains in the U.S., with over 8,100 stores across the country. Unlike Dollar General, Family Dollar focuses on offering a wider selection of product, including higher-priced items up to $10.
The Closure of Stores in 2020
In 2020, Dollar General announced that it would be closing 370 stores across the country, representing roughly 2% of the company’s total stores. This was a surprise to analysts, as the company had seen rapid growth up until then, with hundreds of new stores being opened every year.
Family Dollar also followed with a wave of closures, announcing in May of 2020 that they would close up to 880 stores, representing more than 10% of their total stores. Family Dollar further revealed that the closures would focus on underperforming stores, mainly those located near other Family Dollar stores.
The Reasons Behind the Closures
There are various reasons behind the closures of these Dollar-brand stores. One of the major reasons is the changing face of the discount retail industry. In recent years, discount retailers have increasingly faced competition from online retailers and streaming services. This has caused many people to become less likely to shop at physical stores.
Another major factor to consider is the rise of specialty stores in the discount retail industry. Specialty stores are becoming more common, and they are offering shoppers a wide range of items not found in traditional discount retailers. As a result, shoppers have more options available to them, and they may be more likely to shop at specialty stores rather than traditional discount stores.
In addition, the growth of Dollar General and Family Dollar has likely been a factor in the closures. Both companies had seen tremendous growth, opening many new stores over the years. This growth may have created a market that was over-saturated with both stores, leading to the closures in 2020.
The Impact of the Closures
The closures of these stores have led to some changes in the discount retail industry. Most notably, these store closures have caused some consolidation in the industry. With the closures of 370 Dollar General stores and 880 Family Dollar stores, the number of stores available for customers to shop at has decreased drastically. This has paved the way for the establishment of specialty stores, as well as given larger discount retailers the opportunity to expand their presence in certain markets.
The closures have also affected the employees of these stores. While Dollar General has offered the employees of its closing stores the opportunity to relocate to other Dollar General stores, Family Dollar has not been as generous, and the majority of these store employees have been laid off. This has caused an unfortunate economic ripple effect in several communities across the nation.
The 2020 closures of Dollar General and Family Dollar stores have been a major surprise to the discount retail industry. Many analysts had expected the two companies to continue to expand their presence across the country. However, the saturation of the market, as well as the rise of specialty stores, has caused these two major chains to close up thousands of stores across the nation. The closures are sure to have a lasting impact on the discount retail industry, and many will be watching to see how it continue to develop in the coming years.
