Dollar Tree Says Goodbye to Family Dollar—But Don’t Expect Lower Prices
Dollar Tree has announced that it’s selling the underperforming Family Dollar brand due to a multitude of factors, including inflation, theft, and a customer base with less money to spend.
This news is making big waves around the retail world, because Dollar Tree is taking a huge loss on the sale. After acquiring Family Dollar for $8.5 billion only 10 years ago, Dollar Tree is now selling the brand for around only $1 billion.
Of course, this news has us wondering about its potential effects on bargain shoppers. What affect will this sale have on prices at Dollar Tree?
Until 2021, you could count on everything at Dollar Tree to be $1. Then, they raised prices to $1.25 in 2021. Now, it seems that you’ll find new pricing increases every time you walk into the store.
We shared some of our latest Dollar Tree price increase observations just a few days ago, and it’s clear that prices are going in one direction only – up. Could the sale of Family Dollar boost Dollar Tree enough that they can pass along some savings back to the customer with a return to lower prices?
At the risk of sounding like a pessimist… we’re not too hopeful that this sale will lead to lower costs for customers. Prices were already going up before the sale was announced, and that’s a trend that’s very unlikely to change.
Dollar Tree said in a press release that it will be focusing on “expanded assortment, significant planned new store openings across the United States, and transactions that advance our growth strategy.” Could that last bit be code for price increases? After all, they’re going to have to make up $7.5 billion somewhere!
What we do know for sure is that lower prices weren’t mentioned anywhere in this announcement. 😞
At the end of the day, Family Dollar was a drain on Dollar Tree’s resources, so it had to go. Now, Dollar Tree hopes to have more resources for the improvement of its own brand so that it can be more onlinepetitive, and ultimately profitable. Unfortunatley, we do not expect any of those savings to be passed on to shoppers.
If you’re looking for low-cost basics, Dollar Tree will still have them. But you’ll be paying a little bit more for them, because the days of everything being $1 are likely in the rearview mirror.
