On the 4Q print Dollar Tree announced the closure of an additional 390 Family Dollar Stores, and 200 that will be rebranded as Dollar Tree. ~150 locations have been announced to date and are set to be closed in May.
We ran some analysis to get a sense of the profile of the 150 announced closing stores. We specifically looked at income, population, and overlap with both itself (Family Dollar) and Dollar General.
Here are key observations from our analysis:
- Though there seems to be no single key defining demographic characteristic the most notable callout is its overlap with other Family Dollar stores is relatively high with 32% having another FDO within 3 miles. Certain markets are likely over penetrated and transfer sales may improve the profitability of these markets.
- The closures include standalone, strip mall, rural, urban and suburban locations and beyond that, locations appear to consist of both new and older locations with some buildings appearing newly renovated.
- Close proximity with Dollar General was not a common factor in which stores were chosen for closing.
- Another interesting takeaway is that a number of the locations were on highways and likely inaccessible by bus. In our conversations with store managers we have heard that what the better stores have in common is close proximity to a bus station. The better traffic leads to better four wall margins.
In our first Black Book DLTR | Time to Get Active, we outlined that the greatest opportunity for a productivity boost was through merchandising, including empowering store managers to make some assortment decisions, reducing/ fixing SKU assortment and leveraging the Dollar Tree buying organization to offer impressive value that will drive traffic and sales at the Family Dollar banner.
Closure Statistic Callouts:
- 32% of the stores closed overlap within a 3mi radius of an existing FDO location.
- A 13% 1 mile overlap with an existing Dollar General location.
- Median population in a surrounding 2 mile radius of 6,440.
- Median household income of $41,673 in a 2 mile radius.
- 22% of households within a 2 mile radius collect SNAP benefits.
