The American dollar store falls on hard times

Ruth Colvin-Graves, 76, of Columbus, Ohio, used to make Family Dollar her go-to destination for snacks, paper towels, and cleaning products. 

“These were all things that I wouldn’t have to choose between feeding me and my son or keeping a roof over our heads,” Graves said.

Like many customers, the discounts and convenience enticed her. 

But now, she says, she stays away from all dollar stores.

“They lost their focus on who exactly their customer base was,” Colvin-Graves said. 

She says prices have increased, expired goods are on shelves, there are chronic staff shortages, and an unpleasant shopping experience.

“On any given day, you had to maneuver around boxes in aisles, and items were not placed where they should be,” Colvin-Graves says.

She isn’t alone in her shift in attitude about dollar stores. 

Ellen Forroux of Medford, Oregon, finds herself running into Walmart, which is sprawling in size and less conveniently located, instead of the smaller format neighborhood dollar stores she used to frequent. Forroux is disabled and lives off her Social Security income, so stretching dollars and avoiding big box stores is important to her.

“I really depend on Dollar Tree,” Forroux says. And dollar stores like Dollar Tree depend on customers like Forroux.

However, Family Dollar recently announced that it shuttered 1,000 stores, and the Los Angeles-based 99-cent Only chain filed for bankruptcy — though there is an investor-led attempt to save the store brand underway. These events point to problems in the sector that have been turning off customers like Graves and Forroux. Even Dollar General is not immune to problems. It’s growing sales, but slower than previous projections, and over the past year, its shares are down over 30%.

What’s causing store closures

A convergence of competition and customer factors are causing turbulence in the sector, according to William & Mary business professor John Strong, who studies dollar stores. 

The 99 Cents Only chain, with 371 stores primarily in the West, needed — but lacked — the scale and capability to counter far larger rival Dollar General, which began rapidly expanding into its core market….