With rising bills and grocery costs, one might expect dollar stores like Family Dollar and Dollar General to be thriving as affordable shopping destinations. Yet, recent trends and store closures indicate a shift in consumer behavior, with these stores facing notable challenges.
Dollar General has seen a modest increase in sales, but not to the extent that analysts had anticipated. The company’s stock has plummeted by over 30 percent in the past year. Family Dollar, in comparison, has struggled even more to achieve profitability. John Strong, a professor of business administration at William & Mary, noted, “Family Dollar was never as good a business as Dollar General.”
Despite the escalating cost of daily necessities, customers are steering clear of these budget-friendly outlets. Complaints about increased prices, poor product quality, understaffed locations, and disappointing shopping experiences are common reasons cited by former patrons for their shift away from these stores.
One ex-customer from Columbus, Ohio, expressed dissatisfaction with Family Dollar, noting, “They lost their focus on who exactly their customer base was.” She described stores cluttered with unstocked merchandise and obstacles like boxes in aisles.
Competition from other retailers exacerbates the challenges for dollar stores. Walmart has been successfully attracting these stores’ customer base, while Aldi has made inroads into their market share, particularly in smaller communities.
Employees of these dollar stores have voiced concerns as well, particularly regarding internal management and operational efficiency. An employee from a Dollar General in Ohio shared that despite the low prices attracting customers, the store often remained disorganized and staff were overwhelmed, making it “impossible to get tasks done; there was never enough time.”
Industry experts argue that the rapid expansion and focus on growth may have led dollar stores to neglect core aspects of their business operations and customer service. “Dollar stores have to figure out how to improve the customer experience. Understanding your customers’ needs and how to service those needs is marketing 101,” said Michael Della Penna, chief strategy officer with InMarket. The current trends suggest that dollar stores must revisit their strategies to better meet the demands and expectations of their customers.
