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From WONDERY, I'm David Brown, and this is

0:56

Business Wars Daily on this Thursday, March 21st.

1:00

For one long struggling discount chain, a recent

1:02

announcement seemed to make a lot of ...cents.

1:06

Last week, Family Dollar announced it was planning

1:08

to close nearly 1,000 of its roughly 8,000

1:11

U.S. stores. The

1:13

discount chain, which was bought by Dollar Tree for

1:15

$8.5 billion in 2015, will close 600

1:21

locations this year and 370 stores

1:23

in the coming years, as leases

1:25

expire. Years of

1:27

mismanagement and poor store conditions have hurt

1:29

the chain's brand, according to CNN. Inflation

1:32

is also squeezed shoppers, in addition to

1:34

a reduction in benefits on the

1:36

Supplemental Nutrition Assistance Program, or

1:39

SNAP. Those factors

1:41

have conspired to create a general pullback

1:43

of consumer spending. Add

1:45

all that up, and, well, Family Dollar's

1:47

future isn't looking too crisp. Dollar

1:50

Tree's acquisition of Family Dollar almost a decade

1:52

ago was supposed to be a bright spot

1:54

for both chains. The combined Dollar

1:56

Tree Family Dollar Company hoped that it could

1:58

grow its customer base and fend off

2:01

competition from the likes of Dollar General.

2:03

But alas, Dollar Tree has struggled

2:06

to integrate Family Dollar, according to

2:08

CNN, and analysts say that

2:10

many Family Dollar locations were in worse

2:12

physical condition than Dollar Tree thought when

2:14

it made the purchase. In

2:17

a call with analysts last week,

2:19

CEO Rick Driling noted that lower-income

2:21

consumers comprise a sizable portion of

2:24

Family Dollar's customer base. When

2:26

those folks don't have the money to spend,

2:28

well, that's a problem for everyone involved. While

2:31

Family Dollar's closures will improve its

2:33

profitability, according to CNN, those closures

2:36

are set to leave gaping holes in

2:38

consumer needs. See, Family

2:40

Dollar stores are predominantly located in

2:43

cities and are often in areas

2:45

with few other retail options, like

2:47

big-box stores or supermarkets. So,

2:50

what are customers to do? Well,

2:52

at least one rival is hoping to court

2:55

them. Dollar General and Family

2:57

Dollar compete for a similar customer base,

3:00

but Dollar General has something

3:02

that Family Dollar doesn't—scale. With

3:04

more than twice the locations of Dollar General,

3:07

it's able to slash prices, and that it

3:09

does. Family Dollar's prices

3:11

are, on average, 10 to 15 percent

3:14

higher than its bigger, cheaper rival. And

3:16

don't forget Walmart and Target, who are

3:18

also attempting to lure in folks seeking

3:20

steep discounts. While Family

3:23

Dollar is concentrated in cities, Dollar General's

3:25

locations veer toward more rural areas. So

3:28

even though for Family Dollar a new day

3:30

has come, one which they hope churns out

3:32

a profit, the customers the

3:34

chains leaving behind may struggle to

3:36

find a replacement, especially if

3:39

one isn't nearby. And

3:41

that could make it difficult for consumers to

3:43

cash in. From

3:47

Wondery, this is Business Wars Daily. I'm your

3:49

host David Brown, written and produced by Jessica

3:51

Romask. Our executive producers are Tina

3:53

Rubio and Marshall Lewis. Hey

4:10

Prime members, you can listen to Business

4:12

Wars Daily ad-free on Amazon Music. Download

4:15

the Amazon Music app today or

4:17

you can listen ad-free with Wondery

4:20

Plus in Apple Podcasts. Before you

4:22

go, tell us about yourself by

4:24

completing a short survey at wondery.com/survey.

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