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As shoppers look for value, dollar stores might seem to be logical destinations. But that penny-pinching mentality hasn’t been enough to lift sales for Dollar Tree and Dollar General. Shares of the deep discounters have plunged so far in 2024. The retailers have each cut their full-year forecasts because of weaker-than-expected sales. And both have had leadership shakeups: Dollar General and its former CEO Jeff Owens parted ways in October 2023, and Dollar Tree CEO Rick Dreiling stepped down Nov. 4. Dollar Tree is also exploring selling off Family Dollar, its more grocery-focused brand. Those results are a sharp turnabout for the dollar stores, which were once Wall Street darlings. The struggles have put scrutiny on the two retailers, which will report quarterly earnings this week. Dollar General and Dollar Tree stores Getty Images Peter Keith, a retail analyst for Piper Sandler, said a challenging mix of factors hurt the retailers. Lower-income customers, who tend to shop at the chains, are most vulnerable to economic changes such as inflation. Razor-thin operating models, such as lean staffing and low hourly pay, contributed to sloppy aisles and a poor customer experience, he said. And competition grew fiercer, as legacy retailers such as Walmart made significant investments in e-commerce to keep up with consumers’ changing habits during the pandemic, he said. “Dollar stores inherently are sort of convenient because they have a lot of locations, but they don’t have very strong digital offerings,” he said. “And I think that’s become a disadvantage in the current environment.” Zoom In IconArrows pointing outwards Shares of Dollar Tree and Dollar General have both fallen more than 40% this year, while the S&P 500 has gained more than 26% during the same period. Stretched shoppers For decades, dollar stores have drawn in shoppers by offering a wide…

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Filed under: News - @ December 3, 2024 1:23 pm