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- [00:21]
David Brown
It's 2017, and in the titanic fight for market share, Dollar General is going urban. For decades, the market leading dollar store chain is focused on rural America. Now it's breaching the city limits. It's intruding on turf long dominated by its closest rival, Family Dollar. And one of the places on Dollar General's expansion list is north Tulsa, Oklahoma. The median income here is around half of that of south Tulsa. Around a third of people living in north Tulsa live below the poverty line. All of which makes it prime territory for dollar stores. Dollar General wants to open on Pine and Peoria, just a few yards from a family dollar. It's an aggressive play. To be sure. There's already nine dollar stores in the neighborhood, each competing to be the most convenient destination. But for city councilor Vanessa Hall Harper, the arrival of another dollar store in her district is anything but good news. The district might be awash with dollar stores, but it doesn't have a single supermarket. So she's launched a campaign to keep Dollar General out.
- [01:30]
Vanessa Hall Harper
I want to say up front, I am not anti dollar stores. I am not against dollar stores. I've never been. But I am against the proliferation of dollar stores because the proliferation of dollar stores is what causes harm. You don't see this proliferation in affluent white communities. They don't go to affluent white communities in and create these food deserts.
- [01:50]
David Brown
Hall Harper works in public health at the city's health department. She knows what happens when people don't eat healthy. On average, people in north Tulsa die eight and a half years earlier than those on the south side of the city. And diet plays a significant role in that. But buying healthier food isn't easy. In north Tulsa, the dollar stores sell little to no fresh produce, but there's so many of them that supermarkets don't want to open there. Adding a Dollar General will only reinforce the problem. So Hall Harper organizes street protests. She files a lawsuit against the Tulsa Development Authority to try and stop it from selling land to dollar stores. She marshaled support for a law that would stop dollar stores from clustering together. This isn't just happening in north Tulsa. Across the country, people and lawmakers are rising up. And it's not the only headwind dollar stores now face either. After years of unchecked expansion, it's getting harder for dollar stores to keep growing. Resistant communities, crime, inflation and more are about to test the dollar store business models to the max. And to survive, the dollar store giants will need to change up this their strategies. From Wondery. I'm David Brown and this is business wars. You know, managing your workforce can be exhausting. Are you tired of a costly and lengthy hiring process? Well, you can simplify and speed up your recruitment with one connection the experts at Express Employment Professionals reduce time to hire, cut down on interviews, and lower your recruitment costs. Just visit expresspros.com today. Express is more efficient than hiring on your own. Check out ExpressPros.com to see how Express Employment Professionals can take care of your hiring.
- [04:13]
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- [05:28]
David Brown
The last episode, CEO Rick Driling turned Dollar General into the king of small box discounters and Family Dollar got bought by Dollar Tree. Well, now the two rivals are rushing to open stores in a battle to become top dollar. But as the dollar store invasion accelerates, people are asking what dollar stores cost their communities. This is episode two, Shrinkage Foreign it's late 2018, and the dollar store backlash is gathering steam. Communities all over the US Are trying to resist their advance, and activists are accusing the dollar stores of creating food deserts, places where incomes are low and there's no grocery store within a mile. Now, the term food desert is one of those sparkly labels that's catnip for journalists who love to work buzzy phrases into their stories. But it also bakes in boatloads of assumptions. Profoundly misleading. So let's be clear. Dollar stores do sell food. And they've done so for decades. But they tend to stock food with the longest possible shelf life. Typically foods that are highly processed or have lots of salt and sugar added to act as preservatives. And as we all know, that's not the best food for us. The reason dollar stores don't stock fresh food is because there's no guarantee people will buy it before it perishes. That waste, or as retailers like to call it, shrinkage, makes selling fresh produce risky and expensive. A can of Spam can sit safely on the shelves for years. Berries spoil in days. So traditionally, dollar stores limit produce to staples like milk or eggs that encourage people to visit their stores more often. But while shelves packed with food that lasts makes business sense, it's out of step with America's increasingly health conscious culture. And when the consumer changes, businesses need to change, too. And as the criticism of dollar stores food offerings intensifies, that's exactly what Dollar general does. In December 2018, Dollar General CEO Todd Vasos announces a push into groceries. The average store will now have 20 fridges, allowing them to offer more chilled and frozen food. It also introduces DG Fresh, a range of fresh fruit and vegetables that will go on sale in several hundred stores. Vasos describes the move as a response to consumer demand. And it sure sounds like Dollar General's bowed to the critics. In north Tulsa, its new store starts stocking the DG Fresh range to stop residents protesting on its doorstep. But Dollar General's not doing this to improve its image. It's all about the bottom line. See, Dollar General wants to take shoppers away from its big box rivals, Walmart and Target. By strengthening the grocery aisle at its 15,000 plus stores, it hopes to persuade people to skip the longer trip to Walmart. Fresh produce is also a way to increase Dollar General's appeal to higher earners. It also sets Dollar General apart from family Dollar. So how did Dollar General freshen up its food selection? Well, first it carefully picked what fresh food it would stock. It focused on the 20 best selling produce items at grocery stores, including tomatoes, onions, apples, and strawberries. The company also controls the temperature of its fresh produce displays to extend shelf life. But there's even more to it than that. It's also a move designed to lower costs. Until now, Dollar General got its supplies of frozen and chilled food from external distributors. That made sense when the stores carried fewer groceries. Running warehouses and truck fleets is expensive business. But now that it's stocking more groceries, the calculations changed. It now makes sense for Dollar General to handle distribution itself. So it can better control costs and doesn't have to pay the markup that distributors charge. It also means Dollar General can make more frequent deliveries of food to its stores. More deliveries means less risk that stores will end up overstocked, reducing losses from the food going bad. Like so many things in business, when you peel back the layers, it all goes back to distribution and logistics. So by embracing groceries, Dollar General boosts its appeal to customers, gets an edge over the competition, and cuts costs while also improving access to healthier food in hundreds of communities. The PR win. Well, that's just a happy side effect. But opening distribution centers, buying trucks and installing thousands of refrigerators is expensive. So to offset that investment, Dollar General looks to reduce its spending on security and labor. And that ramps up another problem that's putting dollar stores in the headlines. It's the other thing retailers call shrinkage. Most folks call it death.
- [10:37]
News Anchor
We begin tonight with the growing number of Detroit dollar stores caught up in a crime spree. The number is quite shocking. 20 armed robberies at stores across the city in 22 days. Some hit twice.
- [10:50]
David Brown
One security company owner told us he.
- [10:51]
News Anchor
Won'T even take jobs in Indianapolis dollar stores.
- [10:55]
David Brown
I'm no longer going up there. I'm not allowing my employees to go up there. I will not do it.
- [11:00]
Government Official
It's not worth the risk of risking.
- [11:03]
David Brown
Somebody else's life to make a dollar. Within the span of four days in the month of March, the Dollar General stores on Salem Avenue and North Main street were both robbed. And based on the surveillance video, it appears the same suspect is responsible for both robberies. Crime Stopper says it is only a matter of time before a recent string of robberies at local dollar stores hurts business. That's because employees and customers say they are afraid to be there if the suspects aren't caught. Across the nation, robberies at dollar stores are making headline news, creating a perception that these stores are unusually susceptible to crime. But the reality is more complicated. It's true that a small scale study in Chicago found crime increased when dollar stores opened and fell when they closed. But other studies report the same happens with fast food restaurants, gas stations and drugstores. What all these stores have in common is that they carry a lot of cash, often have weak security, and are frequently located in lower income neighborhoods where crime is higher. Police argue that dollar stores could reduce the risk of being robbed by employing security guards or installing better cctv, you know, cameras. But when your business is built on tiny margins, these expenses have consequences. Either prices have to rise or profits have to shrink. And when the cost of preventing crime is higher than the losses from crime, some retailers conclude that robbers and thieves are cheaper than effective security, even if that pushes up the costs for the local police force and taxpayers who fund them. It's 2019, and in rural America, a new front in the dollar store wars is opening up because Family Dollar is stepping up its game by moving to the country. When Dollar Tree bought family dollar in July 2014, it was struggling. Family Dollar might have been the second biggest dollar store, but it was a straggler when it came to growth and profitability. Dollar Tree thought it could fix it. But five years on from the acquisition, that early optimism vanished. Integrating the two businesses has proven harder than expected. Family Dollar is a convenience store that sells items at a wide range of prices. Dollar Tree is a variety store that prices everything at a dollar. Their activities don't neatly mesh, making it harder to find efficiencies. Family Dollar stores aren't in great shape either. In the brand's rush to expand, it's neglected its existing stores, which now need extensive refurbishment. But with more than 8,000 Family Dollar Stores nationwide, refreshing all of them will be expensive and slow. Dollar Tree is suffering, too. The time and energy it's putting into Family Dollar is causing it to lose focus on its own brand. But now Dollar Tree thinks it's finally found a way to claw back some upside to the Family Dollar acquisition. The Combo Store Putting two brands under the same roof isn't a new idea. Taco Bell and KFC have been doing it since the 1990s. But when businesses own two brands that operate in the same way and can complement each other, it can make a lot of sense. In this case, Family Dollar sells the everyday basics household goods, food, clothes. The Dollar General Nextdoor sells non essentials like decorations, wrapping paper, beauty products and art supplies. But having the two stores side by side can tempt shoppers into spending more. People might come in to buy milk at Family Dollar and then get tempted to buy a small gift at Dollar Tree. Others come to buy a birthday card at Dollar Tree, but then grab some groceries at Family Dollar too. So you see how a combo store can increase sales. Housing the two stores in a single building and staffing them with the same people also makes combo stores cheaper to run than two standalone stores. In turn, that lets Family Dollar and Dollar Tree open stores in places where they previously would struggle to turn a profit. After years of sticking to cities and suburbs, Dollar Tree can now open in rural towns with three to four thousand people. A whole new market for expansion has just opened up. In their first year, the combo stores boost Dollar Tree's sales 20%. Dollar Tree's finally homed in on a winning strategy. But after years of missteps, is it too little, too late? You know, it's funny.
- [15:42]
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- [15:48]
David Brown
Care of the basics.
- [15:50]
Canva Presenter
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- [15:56]
David Brown
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- [15:57]
Canva Presenter
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- [16:24]
David Brown
All you need is one stick, 16.
- [16:26]
Canva Presenter
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- [16:55]
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- [17:15]
News Anchor
Of $45 for 3 month plan equivalent to $15 per month required intro rate first 3 months only, then full price plan options available, taxes and fees extra. See full terms@mintmobile.com It's March 2020 and.
- [17:35]
David Brown
The coronavirus pandemic is engulfing the world. Hospitals are overwhelmed and people are being told to shelter at home to protect themselves. But while white collar workers settle into the luxury of working at home via Zoom, many low paid blue collar workers get hit hard. Their income drops. Sometimes it stops altogether. The situation threatens disaster for the dollar stores. These are their core customers. But then the federal government steps in to save the day and we have.
- [18:07]
Government Official
Some breaking news that affects families that receive assistance from the state. Emergency benefits are now being handed out to SNAP participants because of COVID 19. That means each participant will see their benefits go up by about $75 a month. Officials with the state's Department of Social Services says this is a way to make sure low income Virginians don't go hungry during the coronavirus crisis.
- [18:30]
David Brown
SNAP is the Supplemental Nutrition Assistance Program, the benefit formerly known as food stamps. It helps low income households pay for food. Those eligible for SNAP get debit cards they can use to help pay for purchases at participating stores. And in reaction to the economic pain of the pandemic, it's getting a temporary increase. The bump to SNAP immediately benefits the dollar stores. Not only are people shopping closer to home, but now many of their poorest customers have more money to spend. Dollar General's profits leap more than 50%. Family Dollar suddenly becomes the sixth largest Snap retailer in the U.S. but while Dollar General's seeing profits boom, Family Dollar struggles to capitalize on the influx of snapcash. The extra profits get swallowed up by renovations of its long neglected stores and the supply chain headaches caused by the pandemic. And then, as the world starts to return to normal, inflation hits. With the cost of just about everything rising, Dollar Tree finds itself in a bind. Because for decades it has sold itself as a place where everything costs $1.
- [19:43]
Vanessa Hall Harper
Excuse me, sir.
- [19:44]
David Brown
Yes? How much for this Revlon shampoo? Everything in the store is $1. Wow. Believe it, everything's a dollar at Dollar Tree. Are you new?
- [19:52]
Family Dollar Customer
No.
- [19:52]
David Brown
How much are these Panasonic batteries? $1. Oh, that boggles my mind. How much is this? $1. Seriously? Seriously. Bottom line? Bottom line is a buck at Dollar Tree. There's no need to ask how much. Everything in the store. Store is $1. Believe it. Not anymore, it's not. In the fall of 2021, inflation forces Dollar Tree to break its $1 price point. Now, most products cost $1.25. It's a high risk move that obliterates the company's main selling point. But with the costs of goods, labor and freight rising fast, there's no alternative. This is history repeating. Back in the mid 20th century, there were things called five and dime stores. Anyone remember? Everything in them cost five or 10 cents. But then inflation pushed prices up to a point where the only things that cost 10 cents was stuff no one wanted. Many 5 and Dimes turned themselves into dollar stores or reinvented themselves in some other way. Those that didn't aren't around anymore. Well, today the same thing's happening to dollar stores. One dollar used to be a magical price point that drew customers in. Now it's a business liability. But while Dollar Tree adjusts to this new reality, Dollar General uses its Covid snap windfall to open new stores even faster. In 2021, it opens more than a thousand new stores, more than any other retailer in the United States. Dollar General store openings are now a slick operation. It can go from breaking ground to opening for business in as little as four months. And in late 2020, that store opening machine is eyeing up a plot in the small town of Morgan, Minnesota. The news that Dollar General is looking to build a store on the edge of town worries Morgan's 74 year old mayor, Jerry Harris. Morgan's main street is already littered with empty stores. One of the exceptions is the family run grocery, and Hiras is protective of it. In his opinion, it sells the best ribeye steaks around. And he's heard that mom and pop grocery stores often close down once a dollar store moves in. So Hiras gets into his car and heads out of Morgan on a mission to find out what's planned. Hurrius is a Republican. He's pro competition. His background's in construction, and he wants to be sure that the local construction crews won't miss out on extra income. If he objects to Dollar General's arrival, he heads north over the Minnesota river and onto the nearby town of Fairfax where a new dollar store recently opened. There he meets with an electrician friend. Over coffee, Harris asks the question burning in his chest. Say more about that new dollar store build. Was it good for business? No. Hearis raises an eyebrow. Ah, come on. Somebody must have done okay out of it. No one from around here. They brought their own team of contractors in. What about the materials? They brought in all that with them too. Chucked in all the steel flooring, even the lights. The guys at the machinery shop told me that in the whole four months that the dollar store's crew were here, they bought just one thing from them. Want to know what it was? Sure. A single nut for a bolted joint. One nut to replace one they stripped. Hiras has heard enough. Even a simple build like a dollar store should cost about a quarter of a million dollars, he reckons. But it seems like local communities only benefiting. Harris comes to a stark conclusion. The dollar stores aren't coming to add to struggling communities. They're coming to squeeze out what little's left. Harris leaves Fairfax with fire in his belly. He's now going to Get Morgan to join the other 75 towns and cities in America fighting the Dollar Store invasion. But the scattered opposition's doing little to curb Dollar General's ambitions. The company's not just opening more Dollar General stores and stocking more fresh food to boost its profits. It's also rolling out a new retail brand, Pop shelf. The first two Pop Shelf stores opened quietly in October 2020 near Nashville. Unlike Dollar General, Pop Shelf isn't focused on selling everyday essentials. Instead, it sells fun items like party supplies, home decor, toys, beauty products, all at low prices. But it's not targeting folks on low incomes. The people Dollar General wants Pop Shelf to reach are suburbanites with household incomes as high as $125,000. In other words, the affluent people who shop at Target and Dollar Tree and Pop Shelf's brightly lit, clean stores are full of on trend merchandise. The chain quickly wins fans in today's video. I'm gonna be doing a shopping haul from Pop Shelf, and I am really in love with this store. And Pop Shelf's delivering the financial goods, too. First year sales at each Pop Shelf store reach as high as $2 million. That's $600,000 more than standard Dollar General stores. The gross margins are better, too. By the time Pop Shelf is putting its 2021 Halloween decorations onto its shelves, Dollar General is readying plans to spook Target and Dollar Tree by opening 1,000 pop shelf stores over the next four years. While $ General's getting a Halloween boost, Dollar Tree and Family Dollar are starring in a real life horror story new.
- [25:52]
Family Dollar Customer
At 10 more than a thousand dead rodents and birds discovered at a Family Dollar distribution center. Food and Drug Administration expectors say they made that discovery at the store's West Memphis distribution center. And because of that, tonight hundreds of Family Dollar stores are temporarily closed.
- [26:10]
David Brown
It's January 2022, and FDA inspectors just made a horrifying discovery at a Family Dollar warehouse in Memphis. The place has rats and mice, and not just a few more than a thousand. A city of rodents. They're scurrying around the warehouse using a disused conveyor belt as their own little superhighway. And up above them live the birds that have nested in the roof from where they're dropping land on the merchandise. There's breakfast cereal and sunflower seeds spilled on the floor and mixed up with rat stools. Chocolate protein shakes are covered in bird droppings. And there are baby wipes stained with rat urine. But what anchored the inspectors the most was that Family Dollar knew about it. They found internal company records showing that employees were reporting the vermin problems at the warehouse as far back as order August of 2020, one year and five months before the government inspection. But the reports went ignored even when Family Dollar Zone compliance inspectors reported the problem. And in the meantime, the merchandise in that warehouse went on being shipped to stores in six states and sold to customers. Family Dollar will eventually be fined nearly $42 million for the infestation. It's the biggest criminal penalty ever in a food safety case. And it's also the last straw for investors in Family Dollar's parent company, Dollar Tree. They've grown impatient of the company's weak performance compared to Dollar General's steep growth. Dollar Tree bought Family Dollar eight years ago, but Family Dollar stores are still dogged with reports of empty shelves, dirty and cluttered interiors and piles of garbage outside. So several of Dollar Tree's biggest shareholders decide to take action. They determine it's time for new leadership at the company. They want a visionary in charge, a CEO who's already proven they can take a struggling retailer and transform it. And they think they know just the man. Rick Dryling Yep, the former Dollar General chief who rated himself 12 out of 10. He took $ General from basket case to stock market superstar just before retiring. Dollar Tree convinces the 68 year old to come out of retirement and take on the challenge of finding a way to re energize Dollar Tree and Family Dollar. But Driling is about to discover that the market conditions have changed substantially in the seven years since he left Dollar General.
- [29:01]
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- [29:43]
Family Dollar Customer
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- [30:44]
David Brown
Chesapeake, Virginia Rick Driling sits at a table with his top executives at the headquarters of Dollar Tree, Family Dollar's parent company. He's just become the company's CEO after spending the past year serving on its board of directors. He knows the dollar store market is now in a very different place from what it was when he took charge of Dollar general back in 2008. The aftershocks of the global pandemic mean inflation is at its highest in decades. The cost of food, fuel and rent is rising fast, and that's made consumers shopping patterns unpredictable, almost as unpredictable as Family Dollar's supply chains. It's clear that prices need to be as cheap as possible to get shoppers through the door. He's already ordered price cuts to ensure Family Dollar is price competitive with Dollar General. To make this work, the back office operations need to be as efficient efficient as possible. But thanks to years of under investment, Family Dollar's operations are a mess. The IT systems are ancient, making every section of the business less efficient, from distribution to hr. Dryling can see why Family Dollars failed to keep up with Dollar General. Somewhere along the way, the company got low cost and no cost. Confused now, he worries about whether the business can afford the investment needed to fix its problems. So to test the water, he orders full renovations of nine stores. He asks his team for an update on the pilot renovations. They tell him that sales at the renovated stores rose 19%. Shoppers also bought more items on each visit. Driling senses there's a but coming. And there is. It cost just over $130,000 to renovate each of the stores. That's almost double what it costs to update a Dollar Tree store. Dryling grimaces. This means they have to carefully choose which stores to renovate to ensure they get the best return on investment. He moves on to another test he's ordered the company to conduct, paying store workers more. Family Dollar is suffering from high staff turnover. Many stores are opening late and closing early because they don't have enough people. So Family Dollars run a trial to see what happens when they pay higher wages? As expected, turnover falls, late openings and early closures are cut in half. More people apply to fill vacancies and manager turnover is reduced by a third. Then comes another. But the team informs him that increasing labor costs at the same time as renovating stores and reducing prices will put unbearable strain on Family Dollars profit margins. One executive then points out that there's a further financial crush coming. The federal government just cut the extra snap payments it gave people during the pandemic, and that will wipe out about $95 a week from core customers budgets. Driling frowns Family Dollar's customers are barely managing even with those snap payments. The outlook is bleak. And it's about to get bleaker because a new threat from China is coming for the dollar. Its February 2024 and time for the Super Bowl. More than 123 million people are watching the NFL championship game. It's an advertising bonanza for the game's broadcaster, CBS. It charges almost $7 million for a 30 second ad. So when it comes to super bowl commercials, the screen time usually goes to big household names. This year, though, viewers are going to encounter an animated commercial from a retail newcomer, one that's been spending big on marketing over the past three years.
- [35:00]
Family Dollar Customer
Download the Temu app and shop like a billionaire.
- [35:04]
David Brown
On the screen, viewers see items ranging from dresses to sporting goods and kitchen appliances being advertised at rock bottom, bottom prices. And now millions of Americans who had never heard of Temu three years ago are checking it out. Google searches for the Chinese owned company jumped by an incredible 1100%, and that's a concern for the dollar stores. Temu is only 17 months old, but it's already grabbed 14% of the money customers spend at Dollar General, Dollar Tree and Family Dollar. Temu is part of the new wave, the online dollar store, and it operates on a big budget. In 2023, Temu spent an estimated $1.7 billion on marketing. Temu was founded with the exact same purpose as Dollar General and Family Dollar. It wanted to cater to the forgotten shoppers, the cash strapped millions who regular stores ignore. But while the dollar stores did that in bricks and mortar retail, Temu is doing it online. Amazon might be the big dog in online shopping, but its focus is more on middle income shoppers. These customers have money but are time poor, so the convenience, speed and range of buying online is more enticing than going to the store. But Amazon struggles to make its delivery model work in rural and poorer areas. That's why dollar stores have been largely unaffected by Amazon's impact on retail. While companies like Walmart and Target have been forced to respond. What temu's doing is filling that gap. It's serving shoppers who don't mind waiting up to 10 days for a product to be delivered because they care more about price than time. Okay, but what makes it possible for TEMU to sell items so cheap? The reason is tariffs. In 2018, the US imposed tariffs on imported Chinese goods. This meant US companies importing those goods had to increase prices. But not all imports are treated the same. There was a loophole. Import taxes might apply to shipping containers full of goods, but they don't apply to packages valued at less than $800. And Temu's entire business is based on making the most of that exemption. Instead of opening large shipping warehouses near customers, TEMU opens them close to the Chinese factories that make its goods. It then loads each individual package onto cargo planes that fly to the US for delivery to doorsteps. And because it doesn't have to pay import taxes on those items, it can undercut the dollar stores. But while TEMU attacks online, Walmart's upping the pressure in the physical realm. For years, Walmart's been chasing higher income customers. But now, with Americans still reeling from the impact of inflation, it's going back to its discount roots by slashing prices both in store and online. The intensifying price competition is a challenge for all the big dollar store brands. Dollar General, Dollar Tree, and Family Dollar never developed strong online stores. They assumed their offer of unbeatable prices and convenience was an unbreachable moat. But now they are being undercut online. And Walmart's making the savings customers can make at the dollar stores look thinner. The dollar stores are also being hit with millions of dollars in fines and settlements for breaching occupational safety regulations like blocking fire exits with merchandise and leaving out of date drugs on the shelves. The Occupational Safety and Health Administration regards Family Dollar and Dollar General as serial offenders. And in some stores, workers are walking out.
- [39:08]
Local News Reporter
Well, last week, the entire staff of a Dollar General store in Mineral Pool Point, Wisconsin, walked off the job. A large handwritten sign was posted on the front door of the store, located about 40 miles northeast of Dubuque, saying, we quit. Another sign explained the team walked away due to a, quote, lack of appreciation, being overworked and being underpaid.
- [39:27]
David Brown
I can come and build all these businesses on every different corner, but you can't pay us the workers who are making it possible for you to do that. In April 2024, the toxic cocktail of inflation, price competition, online rivals and labor issues claims a victim.
- [39:48]
News Anchor
Here is that breaking news. Right now, all $0.99 only stores are shutting down. The Commerce based chain will close 371 stores across four states. And that includes right here in California, Arizona, Nevada and Texas.
- [40:04]
David Brown
$0.99 only was a regional chain founded in Los Angeles. It was tiny next to Dollar General and Family Dollar. But its collapse sends a shudder through the entire dollar store business, not least because its story has plenty of parallels with Family Dollars. It went private in 2011 in a leveraged buyout worth $1.6 billion. At the time, 99 cents only had some of the highest profit margins in the business, but the buyout saddled it with big debts. So when the retail shocks of the pandemic hit, it couldn't afford to improve its supply chains or invest in technology. So it slipped further and further behind until it had no choice but to give up the fight. And $0.99 only isn't the only one suffering. At around the same time, Dollar Tree announces it will close almost a third thousand Family dollar stores nationwide. The cost of renovating them is simply too high. Dollar Tree CEO Rick Driling has also come to the conclusion that the company would be better off if it sold Family Dollar instead of continuing to try to fix it. Five months later, Dryling returns to his retirement. Even Mr. 12 out of 10 couldn't turn this business around. And in March 2025, Dollar Tree finds a buyer for Family Dollar. Two private equity companies, Brigade Capital Management and Masalum Capital Management, they're getting the chain for a billion dollars. That's quite a bit less than the 8.5 billion that Dollar Tree paid 10 years earlier. Dollar Tree hopes for a brighter future without Family Dollar. But for the first time in years, the dollar stores are shrinking rather than growing in number. Dollar General used to be a Wall street hero. Now it's scaling back its frenzied expansion plans and shutting some of its 20,000 stores. But that doesn't necessarily mean the dollar store's business models are broken. They might be reining in expansion, but they still make billions. Sure, the idea of a store where everything costs a dollar is fading. But the five and dime stores disappeared in the 70s during an earlier inflationary period. And the same's happening to the genuine dollar Store now. Why do we even call them dollar stores? Maybe it's time for the five dollar Store. Actually, it's already happening with chains like Five and Below. But they're struggling with many of the same problems as their peers. Perhaps we need to dwell more on Rick Driling's point about family dollars getting confused about the difference between low cost and no cost. Maybe there's a path back to growth there. Imagine a dollar store with a customer service experience that looks a lot like you might find at Target or even cvs. What would that look like? What would you even call it? But one thing we've learned on Business wars over the years is the fallacy of this zero sum game. When one way of business seems unsustainable, others on the outside are dreaming big, spotting opportunities just like TEMU Dreamers. This may be your moment. Make sure to dream big and keep us posted. From Wondery this is Episode two of Price wars, the fall of the Dollar Stores for Business Wars. Now, if you're interested in hearing more about the fierce battles of America's discount retailers, we recommend the Business Wars Season Target vs Walmart A quick note about the recreations you've been hearing. In most cases, we can't know exactly what was said. Those scenes are dramatizations, but they're based on historical research. I'm your host, David Brown. Judy Cooper of Yellow Ant wrote this story. Research by David Wolinski Sound design by Ryan Potestan Fact checking by Gabrielle Jollet Our managing producer is Desi Blaylock. Our senior managing producer is Callum Plews. Our producer is Tristan Donovan of Yellow End. Our senior producers are Emily Frost and Dave Schilling. Karen Lowe is our producer emeritus. Our executive producers are Jenny Lauer Beckman and Marshall Louie. For Wondering.
- [44:31]
News Anchor
Hey, I'm Cassie Depechel, the host of Wondery's podcast Against the Odds. In each episode, we share thrilling true stories of survival, putting you in the shoes of the people who live to tell the tale in our next season. It's February 14, 1979. Elmo Wortman and his three children are stranded on a remote Alaskan island after a massive storm destroys her sailboat. Miles for help. Miles from help, they have to face the brutal cold with barely any food, only a sail for shelter, and a leaky plastic dinghy. Desperate to survive, they build a raft and try to reach safety. But as starvation and frostbite take hold and days stretch into weeks, their endurance is pushed to the limit. Follow against the Odds Wherever you get your podcasts, you can listen ad free on the Amazon Music or Wondery app.