This Popular Dollar Store Chain Is Slashing Prices, CEO Says
The discount retailer is about to become even more inexpensive.
Dollar stores are where you go when you're looking for the lowest prices—because it doesn't get much lower than a dollar. Over time, Americans have become increasingly reliant on popular chains like Dollar General, Dollar Tree, and Family Dollar, especially during the COVID pandemic. According to NPR, the latest research indicates that 88 percent of people in the country are shopping at dollar stores at least sometimes, and last year, 4 in 10 new stores openings across the U.S. were dollar stores. Now, Americans are counting on discount retailers even more as the nation faces high inflation. And as a result of these challenging economic times, one dollar store chain is actually lowering prices below a dollar. Read on to find out where you'll be able to get the maximum savings.
Inflation is hitting shoppers everywhere right now.
Inflation has been climbing up over the last few months, reaching a 40-year high of 9.1 percent in June, according to the U.S. Bureau of Labor Statistics (BLS). The rate fell slightly to 8.5 percent in July, but that's still much higher than the average 3.8 percent inflation rate per year between 1960 to 2021. As a result, consumers have already started changing their shopping habits. An Aug. 2022 Morning Consult survey of 15,000 U.S. adults found that 85 percent of respondents reported that rising inflation had affected their shopping behavior. Of these, 77 percent said they had cut back on their shopping and 65 percent admitted to postponing minor purchases.
These changes have become more noticeable as inflation has remained at high levels, driving up consumer costs. "The first couple of months of really heavy price increases, it's a bit of a strain, but people don't notice it that much," Neil Saunders, the managing director of analytics company GlobalData told The Washington Post. But as time goes by, "People start to say, 'This is becoming a real drag,'" Saunders said.
Inflation is even affecting dollar stores.
Morning Consult reported that 68 percent of Americans say they're shopping at discount stores more now as a result of high inflation. But even though certain retailers might be faring slightly better than others, the negative effects of inflation are still being felt across the board. In fact, both Dollar General and Dollar Tree—which also owns Family Dollar after a 2015 acquisition—are starting to "feel the pinch" from inflation, CNN reported.
On Aug. 25, the two companies each reported the financial results of their second quarter in the 2022 fiscal year, which ended the last week of July. And while Dollar General and Dollar Tree both reported sales increases, there were clear signs that inflation is beginning to impact these discount chains as well, per CNN.
Dollar General's report indicated that apparel sales had fallen by more than 20 percent compared to the same period last year, and sales of seasonal and home products were also down. On the other hand, Dollar Tree cut its financial outlook for the year, bringing its estimate for annual net sales down to range of $27.85 billion to $28.10 billion from its previous range of $27.76 billion to $28.14 billion.
One popular dollar store chain is now planning to slash prices.
Following the new financial reports, consumers might start noticing even lower prices when shopping at one popular dollar store chain. In a statement, Mike Witynski, the president and CEO of Dollar Tree, Inc., said that the company will be cutting prices at Family Dollar to boost sales. "Competitive pricing at Family Dollar will over the long term enhance our sales productivity and profitability, and ultimately our opportunity to accelerate store growth," Witynski said.
According to the company's report, Family Dollar's comparable sales for consumables increased while it's comparable sales for discretionary products, or non-necessities, fell. These sales declined by 4.1 percent "as shoppers continued to manage through this inflationary environment," Witynski said during an Aug. 25 earnings call.
"They're feeling pressured like they never have before. And in this inflationary environment, with the customer's wallet stretched, our consumers are relying on our stores to meet their budget goals," he added. "So this was really an ideal environment to begin to move more quickly than we previously anticipated to more fully meet the customers' value expectation, close the pricing gaps and win them as customers long term in this inflationary budget."
Family Dollar will also undergo other changes.
During the recent earnings call, Wytinski noted that an overall "refreshing [of] Family Dollar's brand positioning" is one of the key initiatives the company is currently forced on. "The turnaround of Family Dollar is an enormous value creation lever, and it is getting a great deal of focus and attention," the CEO added.
Alongside price adjustments, the dollar store chain's parent company will also be elevating store standards. This will include "adding a linear footage, developing seasonal assortments as a focal point, utilizing deeper shelving on key consumable categories to enhance store efficiencies and improve in-stocks, expanding the direct-to-store delivery offering, enhancing space dedicated to snacks and increasing the beverage offering, and optimizing the frozen food assortments," according to Wytinski.
"We feel very confident in our ability to fix Family Dollar and materially improve its performance long term and in the process, create enormous value," Rick Dreiling, the chairman of Dollar Tree's board of directors, said in the earnings call. "We are a growth company."