Dollar Store Bubble Bursting? Family Dollar Closing 370 Stores, Cutting Prices

Once upon a time, dollar stores were living the high life, enjoying increased revenue and making plans for expansion. Okay, that was just a year ago, but still, a lot can change in a year. And that’s definitely the case for Family Dollar, whose recent revenue drop has executives taking some pretty serious action.

Following a poor financial performance so far this year, Family Dollar announced that it will close 370 stores, reduce staff, and lower the prices on more than 1,000 items, Forbes reports.

The news is in stark contrast to the company’s previous plans to expand its foothold on bargain retail in the United States.

Last year, Family Dollar management announced it planned to triple the number of retail spaces for a total of 23,000 stores. At the same time, the stores added more brand name items and put in additional refrigerated displays for groceries to increase their appeal to consumers.

Now, officials with the company say they plan to slow their expansion pace to just 350 to 400 new stores. The chain opened 500 new stores in 2013 and planned to do the same in 2014.

Perhaps Family Dollar took their growth and the misguided belief that consumers could always find the best prices at their stores a little too seriously.

Thursday’s announcement seems to fall in line with the idea that dollar stores continued to expand at their own peril; a notion Consumerist reported last year.

Local dollar stores experienced a period of high patronage during the recession when consumers traded in shopping trips to big box retailers for those at discount joints. Companies, such as Family Dollar and Dollar General, took their popularity as a sign that consumers needed more stores, and a dollar store bubble was born.

The big question during the period of rapid discount retailer growth was whether or not there would be a demand for these stores once they’re all opened?

Unfortunately, Family Dollars’ move to cut stores, staff and prices might just give us our answer.

Family Dollar Closing 370 Stores And Lowering Prices After Revenue Falls 6% [Forbes]

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  1. theoriginalcatastrophegirl says:

    oh, i hope the new one by my house doesn’t go. the building it’s in was clearly slated to be a drugstore at one time and sat empty from before i bought my house (2009) until last summer, when a family dollar moved in. they are open until ten, which is the latest thing open for 5 miles in one direction and 10 miles in the other, and fits my work schedule for emergency household goods.
    they always seem to have shoppers

  2. GnRJosh says:

    I hate it when people refer to Dollar General and Family Dollar as “Dollar stores”. They might have the word ‘dollar’ in their names, but when someone is talking about a dollar store, they are referring to the stores where everything is sold for the price of $1. Both of these stores, while cheaper than average discount stores, are definitely NOT dollar stores. They are closer to Big Lots than Dollar Tree.

  3. Airwave says:

    I remember when a dollar store near me was closing down. I got a canvas bag for 80 cents. 80 cents! Such a deal!