Goodbye 99 Cents Only. Hello Dollar Tree.
Dollar Tree Expands Westward with Strategic Acquisition
New York (30 MAY): Dollar Tree announced on Wednesday its acquisition of leases for 170 of 99 Cents Only stores across Arizona, California, Nevada, and Texas. These stores, previously operated by the regional chain 99 Cents Only, will be reopened under the Dollar Tree brand starting this fall. This move comes after 99 Cents Only filed for bankruptcy in April, leading to the closure of all its 370 locations.
A Shift in the Retail Landscape
The acquisition highlights a significant shift in the retail industry, marked by consolidation. Unlike the regional focus of 99 Cents Only, which primarily sold groceries, Dollar Tree is a national brand known for discretionary items like party supplies and home goods. Dollar Tree, which historically sold everything for $1, adjusted its pricing in 2021 to $1.25 and above, reflecting changes in market dynamics.
Integration and Expansion
Dollar Tree’s acquisition strategy extends beyond just absorbing another brand’s locations. It includes leveraging the larger store sizes of 99 Cents Only, which average around 20,000 square feet—more than double the size of a typical dollar store. This could present both opportunities and challenges as Dollar Tree integrates these spaces into its existing operations.
Competitive Advantage and Market Position
By acquiring the leases out of bankruptcy, Dollar Tree gains a cost-effective means of expanding its footprint, particularly on the West Coast. Michael Montani, an analyst at Evercore IRI, noted that Dollar Tree capitalized on the “competitor weakness” to secure valuable locations, which are currently in short supply.
The Broader Impact on Family Dollar
This expansion comes amid challenges for Family Dollar, another brand owned by Dollar Tree, which has underperformed compared to its sister brand and other discount chains. Family Dollar is set to close 975 stores, reflecting the broader struggles within the discount retail sector.
This strategic acquisition allows Dollar Tree to bolster its presence and competitive edge in a consolidating market, positioning itself for continued growth and adaptability in the evolving retail landscape.
