A major acquisition in the burgeoning field of discount stores may not have much effect for local residents.
On Monday, Dollar Tree agreed to buy Family Dollar Stores for $8.5 billion. The move will see the merger of two of the nation’s biggest discount retail stores, although Dollar Tree officials said they plan to continue to operate Family Dollar as an independent brand.
Together, the two companies have more than 13,000 stores in the United States and Canada. Dollar General, their largest competitor in the discount store arena, has about 11,300 stores. Larger chains like Wal-Mart and Kroger have been opening smaller stores as well, in an attempt to compete with discount stores.
Dollar Tree, which focuses on suburban markets, sells all of its merchandise for a dollar or less. Family Dollar, which focuses on lower-income neighborhoods, sells its merchandise at a variety of discounted prices.
Family Dollar has more than a dozen stores in Kanawha County, including three on Charleston’s West Side, according to the company’s website.
“My understanding is that although Dollar Tree did purchase Family Dollar, they will pretty much remain separate entities,” said Stephanie Johnson, executive director of West Side Main Street. “Unless they think about changing their the business, I don’t think we will see any real changes. I can’t imagine them closing any stores.
“They employ our residents. They are frequented by a lot of people who are working on the West Side, living on the West Side and passing through the West Side. We want every business to be a part of revitalizing the West Side,” Johnson said.
Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors, said Dollar Tree’s deal will allow it to ultimately lower prices because it will be able to cut expenses by merging some operations.
Dollar Tree has five stores in Kanawha County, according to the company’s website, and is building another at Patrick Street Plaza on the West Side. National representatives for Dollar Tree and Family Dollar did not return calls for comment on Monday, and local employees said they weren’t allowed to comment.
Discount stores -- including Dollar Tree, Family Dollar and Dollar General -- were one of the business sectors to enjoy continued growth throughout the recession of the past several years.
“I think as family budgets get squeezed, more and more people turn to cheap dollar stories to buy goods and to make ends meet,” said Ted Boettner, executive director of the West Virginia Center on Budget and Policy.
“But you really don’t get what you pay for. The food ends up being bad and you end up paying for it with bad health. And people start buying things they really don’t need.
“In smaller communities, the dollar stores are taking over where local grocery stores used to do business. The dollar stores often have over processed unhealthy foods. There are no fresh vegetables,” Boettner said. “These cheap dollar stores gravitate to West Virginia because we have a high percentage of people living on fixed incomes. They will get some short-term savings, but pay some long-term costs in poor health.”
Dollar Tree had $2 billion in revenue from its 4,891 stores last year, while Family Dollar had $2.7 billion in revenues from 8,246 stores and Dollar General made $4.5 billion in revenue from its 11,328 stores, The Wall Street Journal reported on Monday.
The Associated Press contributed to this report. Reach Paul J. Nyden at email@example.com or 304-348-5164.