A former Dollar General executive has said that competition from retailers such as Walmart could be one of the reasons behind struggles facing dollar store chains in the US.
This comes as Dollar Tree, which also owns the struggling Family Dollar chain, saw its shares fall by 20% this week after cutting its financial outlook for the year.
They cited “immense pressures” on their client base, which mostly comprises of low-middle income earners.
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Just last week, rivals Dollar General saw their shares fall to their worst day on record after also cutting their forecast for the year ahead.
Speaking to CNN, former Dollar General executive David D’Arezzo said: “When Walmart is doing well, Dollar General struggles.
“I don’t believe that anybody in the world shares more customers than Dollar General and Walmart because of their close proximity to each other and the density of their locations in the southeast.”
While dollar store chains have been the fastest-growing retailers in recent years by number of store openings, established retailers such as Walmart and Target have lowered prices on items in a bid to poach shoppers from the dollar stores.
According to CNN, Dollar General CEO Todd Vasos said on an analyst call last week that Walmart has been “doing a pretty nice job” in attracting shoppers with low prices.
However, this is not the only reason behind their struggles.
Both Dollar General and Dollar Tree have acknowledged the impact that inflation has had on their customer bases’ buying behaviours.
In addition, some business decisions were also blamed.
Mr D’Arezzo told CNN that Dollar General were “trying to dig out from a failed non-consumable strategy” including pillows, candles and home decorations which haven’t sold well.
Elsewhere, Dollar Tree’s acquisition of rival chain Family Dollar in 2015 hasn’t resulted in success for the retailer, as the closure of over 900 Family Dollar stores was announced earlier this year.
