These two US dollar store chains, Family Dollar and 99 Cents Only, are facing tough times, with Family Dollar announcing the closure of nearly 1,000 stores and 99 Cents Only going out of business. Both companies cite inflation and shoplifting as contributing factors, but strategic mistakes and underinvestment over the years have also played a significant role in their downfall. Family Dollar has struggled since being acquired by Dollar Tree in 2015, with messy stores, high prices, and over-expansion plaguing the chain. Meanwhile, 99 Cents Only has suffered from missteps such as having stores that were too large and inefficient to run.
Family Dollar is set to close 600 locations this year and 370 stores over the next few years due to their unprofitability. The chain has struggled for over a decade with neglected stores, poor product selection, and unhappy workers. Dollar Tree’s acquisition of Family Dollar proved to be a challenge as the two chains had different strategies and Dollar Tree found it challenging to manage the larger store base of Family Dollar. Despite efforts to improve sales, such as selling beer, and renovating stores, Family Dollar has continued to struggle.
99 Cents Only filed for bankruptcy due to challenges in retail, including the impact of the pandemic, inflation, and rising shoplifting incidents. The chain has not been profitable since 2015 and has been unable to keep up with larger competitors like Walmart, Costco, and Dollar General. 99 Cents Only took on more debt after a leveraged buyout in 2011, which limited their financial flexibility and ability to invest in store improvements and growth. The chain’s stores are on average larger than typical dollar store chains, making them costly to operate and maintain.
Both Family Dollar and 99 Cents Only have faced challenges due to their respective acquisitions and strategic decisions. Family Dollar’s acquisition by Dollar Tree has led to operational difficulties and issues with store maintenance and product selection. 99 Cents Only’s high debt load and focus on low-margin groceries have hindered its ability to invest in store improvements and compete with larger retail chains. Despite these challenges, both companies are working on transforming their operations and management teams in hopes of turning their fortunes around.
In conclusion, both Family Dollar and 99 Cents Only are facing significant challenges due to a combination of external factors like inflation and shoplifting, as well as internal challenges stemming from missteps in strategy and underinvestment. Both chains are taking steps to improve their operations and management, but the road ahead remains challenging. It remains to be seen whether these companies can successfully navigate these difficulties and bounce back from their current struggles in the competitive retail landscape.
