Dollar Tree, a prominent player in the discount retail sector, announced a significant expansion by acquiring leases for 170 stores previously owned by 99 Cents Only. This move comes as 99 Cents Only recently declared bankruptcy and shuttered all of its 370 locations. Dollar Tree plans to reopen these stores under its own branding in Arizona, California, Nevada, and Texas starting this fall.
From Bankruptcy to New Beginnings: 99 Cents Only Stores’ Transition
The acquisition marks the end of the road for 99 Cents Only, a regional chain known for its grocery offerings. In contrast, Company operates on a national scale, mostly in suburban areas, and is known for selling discretionary items like party supplies and home goods. This transition underscores a broader trend of consolidation within the retail industry.
Growth Strategy and the West Coast Market
The decision to acquire these leases provides Dollar Tree with a cost-effective strategy for expansion, particularly on the West Coast. “Management felt that these locations are fundamentally good and in relatively short supply, so they took advantage of competitor weakness,” noted Michael Montani, an analyst at Evercore IRI.
Challenges Ahead: Adapting to Larger Store Sizes
One significant challenge that Dollar Tree may face is adapting to the larger store size of the former 99 Cents Only locations, which average about 20,000 square feet—more than double the size of typical Dollar Tree stores. This difference could require a shift in Dollar Tree’s operational and merchandising strategies.
The Impact of Dollar Tree’s Expansion on the Retail Landscape
Company’s expansion through the acquisition of 99 Cents Only stores is likely to have a notable impact on the discount retail landscape, especially as the company integrates these larger stores into its portfolio. Moreover, this move could enhance its presence in urban areas, complementing its Family Dollar brand, which has historically operated in city locations but has underperformed compared to other discount chains.
Dollar Tree’s Strategic Maneuver in Discount Retail
As company sets out to revitalize these newly acquired locations, the retail industry watches closely. This strategic expansion not only helps the company grow its footprint but also strengthens its position in a competitive market, offering a broader range of products and potentially reaching a new customer base.
