Dollar Tree Keeps Growing

The discount retailer is aiming for Dollar Store’s rural market. 

March 05, 2021

Dollar Tree

ALEXANDRIA, Va.—This week, Dollar Tree announced it will open 600 new stores in 2021, continuing the growth of dollar store chains across the nation, CNN reports. The company, which also owns the Family Dollar chain, will open 400 Dollar Tree stores and 200 Family Dollar stores this year. The two chains combined have nearly 15,700 U.S. locations after opening about 400 new locations last year.

Last month, the U.S. Labor Department reported that 10.1 million Americans are out of work, putting the nation’s unemployment rate at 6.3%. Many are forced to cut expenses, and dollar store sales have surged as economically strapped customers seek bargains on food and other items. For example, Dollar Tree reported that sales at stores open for at least one year rose 4.9% during the 13 weeks ended January 30, compared with the same stretch a year ago.

Dollar Tree stores have a treasure hunt-like atmosphere and cater to suburban, middle-income shoppers. They carry seasonal goods, toys, stationary, home decor, kitchenware, gift wrap and party items. Family Dollar is tailored to lower-income shoppers in rural and urban areas and offers more food and household items than Dollar Tree.

All products at Dollar Tree sell for $1, although the chain is testing out a new initiative to sell select products from $1 to $5. Family Dollar sells most of its merchandise at various prices under $10.

Dollar Tree has lagged rival Dollar General in recent years. Dollar General has been opening roughly 1,000 stores a year and now has about 16,000 U.S. locations. The company caters mainly to low-and-middle-income customers in rural and suburban areas with populations of between 3,000 to 4,000.

During the fourth quarter, Dollar Tree said it opened 124 new stores, expanded or relocated 11 stores, and closed 45 stores. Additionally, the company completed 106 Family Dollar store renovations. Retail selling square footage at year-end was approximately 125.1 million square feet, the company said.

Last year Dollar Tree opened 50 new "Combination Stores" in small towns and rural communities. The stores feature elements of both Dollar Tree and Family Dollar, offering a mix of merchandise.

“We are extremely pleased with our customers’ response to the new Combination Store concept. As I have said in the past, we will continue to refine our strategic store formats so that we are able to better serve customers, while improving store productivity, margins and returns,” Michael Witynski, president and CEO, said in a press release. “We believe we can continue to change, evolve and improve.”

Not to be outdone, Dollar General is testing a new store concept of its own, pOpshelf, a new store that targets women in suburban areas with incomes between $50,000 and $125,000 a year. The stores feature a range of home and beauty goods, the majority of which will be priced around $5. Currently, five pOpshelf stores have opened in the southeast and a total of 30 are set to open this year. Dollar General is slated to report its fiscal fourth-quarter results March 18.

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