Why discount stores are struggling to survive
In this economy, you'd think these retailers would be racking up the sales. That's not the case.
Other discount stores have been struggling as well, writes Heidi Moore at The Guardian. Fashion discounter Loehmann's filed for bankruptcy, while Wal-Mart's (WMT) sales have declined for the past five quarters.
"There’s just not enough money deployed by American families to keep all the discount chains in business," Moore writes.
Dollar stores saw their heyday during the recession, when middle-class shoppers came to buy smaller, cheaper packages of household necessities like toilet paper.
While middle-class shoppers have enjoyed economic recovery, America's poorest consumers have not, write Paul Ziobro and Shelly Banjo at The Wall Street Journal. Money spent by households earning less than $30,000 has been flat since 2008, The Journal reports, citing the Bureau of Labor Statistics.
Total income for that group fell 1 percent between 2004 and 2012.
The merger of Dollar Tree and Family Dollar could further crunch Wal-Mart, according to the Journal.
With 13,000 stores between them, the new dollar store will be in a better position to negotiate lower prices from suppliers. This could challenge Wal-Mart, which is already more expensive than dollar chains.
But it's possible that no amount of discounting will win back these struggling shoppers. "A cash-strapped consumer can’t keep buying forever, no matter how low prices go," Moore writes.
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We still aren't employing people the right way. We need full time positions. No one in the lower middle class has money. Family Dollar closing stores and firing people is not a good sign of the economic future. Where is the next level? Sorting through garbage or growing your own food?
I see bad things for the rest of us (Not Wall St) in the next 2 years. Hopefully we get a President who is adept in matters of job creation.
They seem higher on some of their merchandise, and the quality of some of their goods are cheaply made. Their customer service is awful.
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