The first Family Dollar store opened over 60 years ago, since the fifties the discount chain has provided affordable goods to low-income families, but now it seems the company is in dire straits itself.
For a number of years now it’s been clear that Family Dollar has been struggling with poor management and even worse conditions. But those aren’t the only problems being faced by the company; soaring inflation and the COVID-19 pandemic have really affected the majority of businesses worldwide, especially good old fashioned brick and mortar outlets. While the chain isn’t out of the game yet, recent controversies and financial difficulties have resulted in over 1000 stores being shut down across the nation so what are the issues that Family Dollar are facing right now?
The cost of living crisis
This isn’t really unique to Family Dollar, but it’s a factor nonetheless. We all know that recent events have made it difficult for many businesses to survive, let alone thrive. Customers are being more careful with how they spend their money, everyone is struggling to get by, and low-income families are the most affected. As a result, people aren’t buying as much from stores like Family Dollar. CNN reported that retail sales in the U.S. declined by much more than expected in January.
Competition
Not everyone has felt the pinch as much as Family Dollar has — with the chain’s biggest competitor, Dollar General, opening more locations year by year. The two chains are fighting for the same customers, and it looks like the latter is winning the fight, likely due to the store offering lower prices when compared to Family Dollar. In fact, it’s about 10-15% cheaper at Dollar General than Family Dollar, according to CNN. And that isn’t even the only competition, with Walmart and Target also offering more budget-friendly alternatives for customers.
Controversies
Last month Dollar Tree, the parent company of Family Dollar, was ordered to pay a $42 million fine thanks to a rat infestation which affected a huge portion of the stock that was sent out to stores across the U.S. This was the largest fine ever issued by the FDA, and it also seriously damaged the company’s brand on top of costing a fortune. The infestation issue is the result of a larger problem being faced by Family Dollar — that being the company’s poor staffing and poor training, which has led to dangerous conditions and malpractice. A lot of these issues have been placed on the shoulders of Dollar Tree, who bought the chain in 2015.
Looking at the situation as a whole, it’s easy to understand why Family Dollar is closing so many stores. The mixture of unpredictable and completely predictable circumstances means those at the top will have to completely change how they operate moving forward if they want to survive.