Far from winnowing down the dollar store industry, a big retail merger is about to set off a dollar store boom. Your local dollar store might end up changing names, and if you don’t have a local dollar store – just wait.
Dollar Tree announced late last week the long-expected sale of 330 unspecified Family Dollar locations to Sycamore Partners, the owner of various retailers including Talbots, Aeropostale and Coldwater Creek. The sale alleviates fears that the Family Dollar stores would be shuttered. Instead, Sycamore will keep the lights on, and rebrand the stores as Dollar Express. There’s no word yet on how store policies and selection might be affected under the new banner.
The move is the result of Dollar Tree’s purchase of Family Dollar, which it first announced nearly a year ago. In order to ease federal regulators’ anti-competitive concerns, Dollar Tree agreed to sell off Family Dollar stores that are deemed to be too close to existing Dollar Tree locations.
The divestitures will help clear the way for the merger to be finalized in a month or so, at which time the list of Family Dollars set to be sold and reborn as Dollar Express will be revealed.
But that may be only the first move in the dollar store renaming game. Dollar Tree is also considering rebranding some of the remaining Family Dollars, as Dollar Trees.
“There are hundreds of opportunities to improve the productivity through a rebanner strategy,” Dollar Tree CEO Bob Sasser told investors recently. The idea is to “put the right store in front of the right customer,” he explained.
As soon as the merger is finalized, “we are planning to quickly rebanner a small group of test stores,” Sasser said. He expected that most transitions will be from Family Dollar to Dollar Tree, but didn’t rule out changing banners the other way around. “Ultimately our strategy will be to have the banner in each market that best serves the customer of that market,” he said.
Meanwhile, Dollar Tree plans to continue opening new stores, under both banners, at a brisk pace. Dollar Tree currently has some 5,000 locations, and Sasser envisions more than 7,000. Family Dollar has 8,000, and could expand to 12,000. And competitor Dollar General plans to grow from 11,500 stores to more than 13,000 soon.
If you’re keeping score – without even including Dollar Express and other smaller dollar store chains – that equals more than 32,000 dollar stores across the country. For perspective, that’s twice as many as every one of the Walmart, Target, Kroger, Safeway, Albertsons – and even Starbucks locations in the country – combined.
That’s a lot of stores, selling a lot of stuff, for not a lot of money. So if you shop at Family Dollar, keep your eye on the sign outside to see if it changes names. And if you don’t have a dollar store near you at all – it’s most likely only a matter of time.
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