- Inflation and a retail contraction across America are wreaking havoc on dollar stores
As inflation puts pressure on both retailers and consumers, American shopping habits increasingly support the existence of so-called dollar stores.
There’s no denying that inflation, which reached a 40-year high two years ago, has made it nearly impossible for dollar stores to make a profit selling items for $1 or less.
For years, dollar stores weren’t really dollar stores, and many of them sold items for much more than $1. As recently as April, California-based 99 Cents Only announced it would close all 371 locations after decades in business.
KTL reports that 99 Cents Only – with locations in California, Texas, Arizona and Nevada – used to only sell items that cost 99 cents or less. Over time, that changed to most of their items costing 99 cents or less, while a fair amount of their inventory cost more than that.
Dollar Tree, owner of Family Dollar, is also struggling and had to close almost a thousand stores in March. About 600 Family Dollars will close in the first half of this year, and about 370 of the flagship Dollar Tree locations will close in the coming years.
99 Cents Only announced it would close all 371 locations after decades in business
About 600 Family Dollars, owned by Dollar Tree, will close in the first half of 2024
The American Sun calls this phenomenon of mass store closures the ‘retail apocalypse.’
The most expensive item in Dollar Tree now costs $7, while the CEO says the company plans 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 grocer or 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 increased its discount red line to $5, as the 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 its industry rivals face tremendous struggles or collapse completely
These moves by discount retailers to raise prices could very well be a response to the fact that stores like JC Penney and Sears, which sold items cheaper than a department store like Macy’s, have slowly gone under in recent years.
Still, all kinds of stores, with or without discounts, have had to deal with the crisis, including Walmart, Bed Bath & Beyond and Nike.
Big box retailers like Target and Walmart are taking the opposite approach to true discount stores that have resorted to price increases.
For example, the goal is to reduce the prices of at least 5,000 commonly used products, ranging from milk to diapers.
When asked if dollar stores would ever return, KTLA consumer reporter David Lazarus wasn’t too hopeful.
“Discount stores are a reflection of a different time – and a different economy,” he said. “Right now it’s a tough time to be a bargain shopper.”