BusinessEconomic Development

Dollar stores in battle to double down on the poor

By: Jilian Mincer and Lisa Baertlein

Like millions of Americans, Darnel Ware needs to save money, even if it’s 40 cents on a bag of flour.

He searches for those savings during his daily visits to the Family Dollar Store near his home in Fraser, Michigan, sometimes stopping by as many as 10 times a week “if there are things I need,” said the 51-year-old home care provider. “I buy a lot of everything; merchandise and food products.”

He said he typically spends about $30 a trip on items like the soft drinks, paper cups and cookies he bought on a recent afternoon at the small store in a strip mall alongside other discount retailers and small factories five miles from Detroit.

The small but frequent purchases of low-income customers such as Ware add up: Family Dollar Stores,, which operates about 8,200 stores in mainly urban sections of the U.S., is the target of an $9 billion cash takeover offer from rival Dollar General and an $8.5 billion cash and stock offer from Dollar Tree. Both competitors are betting not only on the health of the deep discount retail sector but also on the intractability of poverty in America.

Mid-market retailers like Wal-Mart Stores Inc, Macy’s Inc and J.C. Penney Company Inc have been struggling in recent years as consumers have been slow to return to their pre-recession, freer spending ways. On Wednesday, Target said it was cutting its full-year earnings and slashing prices.

But the popularity of so-called dollar stores is growing. Shopping by the 46.5 million Americans living below the poverty line poor helped boost the annual U.S. market for deep discount stores by 45.7 percent to $48.2 billion between 2008 and 2013, according to London-based market researcher Euromonitor International. The firm projects the sector to grow to $57 billion in 2018. The U.S. Census sets the poverty line at $24,000 a year or less for a family of four.

Such forecasts help explain the battle over Family Dollar, the number-two deep discount chain. Market leader Dollar General Corp on Monday made its $78.50 a share bid, which Family Dollar rejected on Thursday, citing antitrust concerns. In July, the third-ranked chain, Dollar Tree Inc, bid $74.50 a share. Family Dollar has said it prefers Dollar Tree’s lower offer.

To read this article in its entirety visit Reuters

The MinorityEye is a news aggregator that shares digital content from websites and other online resources that focus on minority culture, people and issues relevant to people of color. TME curates the voices, thoughts and perspectives of minority writers, bloggers, authors, reporters, columnists, pundits, consultants and thought leaders as well as those who write about minorities and issues that impact communities of color.

 

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Sharon Sanders

Sharon Sanders is a Digital Engagement Strategist and a Curator of information at The MinorityEye and the President of Clairvoyant, LLC which specializes in strategic communications and multimedia services. She has a B.A. in Psychology from Argosy University and she specializes in “Online Consumer Psychology.” Sharon provides companies with research and insight into the processes underlying consumer behavior in online environments…

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