Monday, August 18, 2014
Dollar Tree and Family Dollar to Merge -- But Will This Lead To Higher Prices For Low Income Shoppers?
Low-income American shoppers are concerned that bigger may not be better. The recent announcement that Dollar Tree is acquiring Family Dollar raises concerns that the merger might jeopardize what they have counted on for deep deal shopping. They are worried that the merger will not only create America's leading discount retailer but also create a different pricing structure or even closing stores.
Merger raises concerns
Dollar stores are huge in low-income neighborhoods in areas such as Jacksonville, Florida and Chicago, Illinois. What has discount shoppers concerned is whether or not pricing will change following the completion of the merger in 2015. The two stores cater to different shoppers.
Dollar Tree, the one who is acquiring Family Dollar stores, caters more to middle-income, suburban shoppers while Family Dollar attracts more low-income workers, according to industry expert Sandy Skrovan. The question remains whether or not the merger will affect pricing as well as the future of Family Dollar stores.
The future, according to store executives
Dollar Tree's CEO Bob Sasser has indicated that both brands will continue to be marketed. He adds, “This acquisition will extend our reach to lower-income customers and strengthen and diversify our store footprint." While this may indicate a greater presence in more small towns and rural areas, there remains ambiguity about pricing and the survival of Family Dollar stores that serve so many low-income Americans.
Whether bigger really is better remains to be seen.