Midday Market Minute: Dollar Stores Start to Feel the Pinch

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During the Great Recession, business was strong for the nation's extreme discounters. Dollar General (DG), Dollar Tree (DLTR) and Family Dollar Stores (FDO) were investor favorites, and all three undertook aggressive expansion. Now, however, The Wall Street Journal reports that their burgeoning numbers of outlets may become problematic, as the prospect of market saturation in a still-tough economy looms.

Family Dollar, which currently has more than 7,000 stores, reported a quarterly profit that failed to meet expectations Thursday. The chain expects to add around 500 new locations this year.

Meanwhile, Walmart (WMT), the world's largest retailer, is said to be "hellbent on winning back shoppers that it lost to dollar stores during the recession," and according to the Journal it's willing to spend $1 billion a year to lower prices towards that end.

The recent expiration of the federal payroll tax deduction is squeezing already-strained budgets, meaning that even dollar store items (beyond the essentials) are out of some consumers' reach. Family Dollar's strategy is "to appeal to the higher end," said a company spokesman, through renovations, named brands and added products.



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burgesswv

M y pet pieve with the discounters is thier failure to reorder stocks when the shelves are empty. They are hell bent on restocking items that are not in demand, maybe thats where the bigger profits are to be had. Some of their prices are too steep for discount stores. I can find some stocks in their stores that are pricier than regular retailers have. If I am to stand in long lines for merchandise that is pricier than mom & pop stores have, then I will go elsewhere.

February 07 2013 at 11:19 PM Report abuse rate up rate down Reply
jeanette

you all need to read the true news on northeast intelligence network. obama will not be removed in handcuffs, his handlers will see to that. instead we will be handcuffed and sent to some of the fema death camps.

February 07 2013 at 10:06 PM Report abuse rate up rate down Reply
goatcars

With the current Democratic administration's Big Government style fiscal policies, the rich get richer and the poor get poorer.....As government intrudes more and more on business, it's hareder for the small guy to cope...large corporations have it figured out.That's why the stock market can prosper in weak economic times...they become more efficient while smaller companies fall by the wayside. Start-up of new business is virtually impossible with massive government regulations, so the strong get stronger.

February 07 2013 at 7:51 PM Report abuse -2 rate up rate down Reply
Andy

Remember when the video craze hit. Small businesses were opening up all around. Pretty soon there were so many, small business video stores were closing all around.

I have thought for some time that the same would happen to the Dollar Stores. Seems this article is confirming this.

February 07 2013 at 5:14 PM Report abuse +2 rate up rate down Reply
LNOFT97

Just because the store name has the word "Dollar" in it does NOT mean it IS a dollar store, or even has cheap stuff. Family Dollar and Dollar General LOOK cheap, but the prices of most of the stuff is no lower than anywhere else, as a rule. A few things are a little cheaper, paper goods, cheap slippers, socks. These places are more like convenience stores.

February 07 2013 at 5:08 PM Report abuse +3 rate up rate down Reply
1 reply to LNOFT97's comment
Andy

It seems to me that Dollar General in my area is priced lower than most stores. The items I buy there are always cheaper, especially even brand name medical OTC products. The normal convenience store here is totally out of line, and Wally World isn't all that great either. Family Dollar does seem to fit what you say. No really great deals, just on some selected items as you mentioned.

Groceries, It is ALDI'S all the way. Even Kroger here is showing the stress of competition. But every time we are at ALDI'S they are busy. All sorts of people, not just low income. After all if you have money you buy good to keep it, and if you do not have money you try to do the same to further your budget. ALDI'S all the way. Just don't buy produce there, we still shop Krogers for produce.

February 07 2013 at 5:19 PM Report abuse +1 rate up rate down Reply
2 replies to Andy's comment
pm0501

Nothing wrong with Aldi! The staples like bread, milk, butter,eggs, OJ, salt, flour, sugar come from the same places as the house brands at the big stores. In my area, Skim milk at Aldi is $1.87/ gal... at the Walmart a mile down the road it's $3.34! Same milk! Lower prices at Walmart? Not always!

One minor complaint about Aldi.... their frozen fish has a higher occurrences of bones than from the other stores. Not usually a problem with breaded fish fillets or fish sticks. Their higher end ice cream is just fine too. I am shocked with how much stuff I leave that store with for under 50 bucks! Not everything we buy comes from Aldi but about 2/3 of our food budget is spent there.

February 07 2013 at 7:27 PM Report abuse +1 rate up rate down
houseiowapark

My daughter and I love Aldi. I like some of their foods even better than name brands and we love some of the foods from Germany and Austria. It is the best and cheapest place to get vegetables and fruits, dairy and bread.

February 07 2013 at 10:07 PM Report abuse rate up rate down
hattie54

Too bad ppl don't shop at a new Dollar store than evil Wallymart.I see they're being a butt head and won't let me post.

February 07 2013 at 4:24 PM Report abuse +2 rate up rate down Reply
1 reply to hattie54's comment
pm0501

What the heck are you talking about?

February 07 2013 at 4:52 PM Report abuse rate up rate down Reply
hattie54

Too bad ppl don't shop at a new Dollar store than evil Wallymart.

February 07 2013 at 4:23 PM Report abuse +2 rate up rate down Reply
usaguy45

Duh!

February 07 2013 at 3:55 PM Report abuse rate up rate down Reply
usaguy45

Duh!

February 07 2013 at 3:55 PM Report abuse rate up rate down Reply
usaguy45

Duh!

February 07 2013 at 3:55 PM Report abuse rate up rate down Reply