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Family Dollar says it plans to cut prices, spruce up stores to meet demand

The chain, owned by Dollar Tree, says it is trying to meet discount demand from value-minded shoppers.
A cyclist rides past a Family Dollar store
A cyclist rides past a Family Dollar store in Chicago on Aug. 2.Scott Olson / Getty Images file

Family Dollar's parent company said Thursday it plans to cut prices at the discount chain and spruce up its stores to boost sales.

“Competitive pricing at Family Dollar will over the long term enhance our sales productivity and profitability, and ultimately our opportunity to accelerate store growth," said Mike Witynski, the president and CEO of Dollar Tree, which completed its purchase of Family Dollar in 2015.

At a time when customers are coming to its stores "to navigate difficult times," the company said, it also plans to improve merchandising and store standards at Family Dollar. In the most recent quarter, the company opened 95 new Family Dollar stores, renovated 257 existing locations and relocated 24 of them, it said.

"We believe we are putting our best foot forward," the company said.

Meanwhile, rival Dollar General announced Thursday that it had opened 436 new stores in the most recent quarter to help meet demand.

“We expect the business to improve as the year progresses, as consumers continue to increase reliance on Dollar General in this more challenging economic environment,” said analysts for Telsey Advisory Group.

The companies are adapting as lower-income shoppers are getting crushed by inflation. Neil Saunders, the managing director for retail at GlobalData, a consulting and research group, said in an email that, despite its name, Family Dollar isn’t always the cheapest retailer.

"It is often beaten on price by rivals like Dollar General, Aldi and Walmart," Saunders said, adding that Dollar Tree wants to bring prices down at its Family Dollar stores, "especially on everyday items, so it’s a bit cheaper to shop at Family Dollar."

For consumers who frequent the stores, he said, every few cents of savings add up. Dollar Tree executives said they are also seeing customers shift from cash to credit at their stores.

"For hard-pressed families, that makes a difference, and Dollar Tree hopes its moves will improve shopper numbers and loyalty," Saunders said.

Burlington Stores, which also reported earnings Thursday, said lower-income customers continue to be "a large and growing demographic."

"And frankly, it’s a demographic that really likes bricks-and-mortar retail," CEO Michael B. O'Sullivan said.

CORRECTION (Aug. 25, 2022, 5:55 P.M.): A previous version of this article incorrectly stated who said Dollar General’s outlook is expected to improve. It was analysts for Telsey Advisory Group, not Dollar General officials.