- Inflation and retail contraction across the United States wreak havoc on dollar stores
As inflation hits both retailers and consumers, American shopping habits increasingly support the existence of so-called dollar stores.
There’s no denying that inflation that hit a 40-year high two years ago has made it nearly impossible for dollar stores to make a profit by selling items for $1 or less.
For years, dollar stores haven’t really been dollar stores, and many of them sell items for much more than $1. In April, California-based 99 Cents Only announced it would close its 371 locations after being in business for decades.
KTLA reports that 99 Cents Only, which has locations in California, Texas, Arizona and Nevada, used to sell only items that cost 99 cents or less. Over time, that turned into most of their items costing 99 cents or less, and a decent amount of their stock costing more than that.
Dollar Tree, which owns Family Dollar, is also struggling and was forced to close nearly 1,000 stores in March. About 600 Family Dollars will close in the first half of this year, and about 370 of its flagship Dollar Tree locations will close in the coming years.
99 Cents Only announced it would be closing its 371 locations after being in business for decades.
Approximately 600 Family Dollars, owned by Dollar Tree, will close in the first half of 2024
The US Sun calls this phenomenon of mass store closures the ‘retail apocalypse.’
The most expensive item at Dollar Tree now costs $7, and its CEO says the company aims to sell products for $10 in the coming years.
Despite the problems Dollar Tree and 99 Cents Only are having, rival Dollar General says it continues to grow.
The discount retailer opened its 20,000th store in February 2024.
But like any other grocery store or retail store, Dollar General sells many items for much more than a dollar.
Five Below, which has more than 1,500 stores in 43 states, has raised the cheap Red Line to $5, as its name suggests.
Even Five Below is experimenting with higher-priced items in separate areas within 250 of its stores, Retail Dive reported in January.
Dollar General opened its 20,000th store in February 2024, as rivals in the industry endure massive struggles or collapse entirely.
These moves by discount retailers to raise prices could well be a reaction to stores like JC Penney and Sears, which sold items cheaper than a department store like Macy’s, which have been slowly sinking over the past few years.
However, all types of retailers, discounters and not, have faced the crisis, including Walmart, Bed Bath & Beyond and Nike.
Big box retailers like Target and Walmart are taking the opposite approach to true discounters who have resorted to price gouging.
Target, for example, is lowering prices on at least 5,000 frequently purchased products, from milk to diapers.
When asked if dollar stores would ever return, KTLA consumer reporter David Lazarus didn’t have much hope.
“Discount stores reflect a different time and a different economy,” he said. “At the moment, it’s a tough time to be a bargain trader.”
