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Dollar Stores Struggle When Walmart Performs Well: Report
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Dollar Stores Struggle When Walmart Performs Well: Report
Sep 6, 2024 1:14 PM

Dollar stores are experiencing a rough patch. Rising competition from Walmart Inc. ( WMT ) and Target Corporation ( TGT ) is undermining their market dominance and threatening their financial outlook.

Walmart ( WMT ), in particular, has been successful in drawing away customers from dollar chains by appealing to higher-income consumers, CNN reports.

Dollar Tree, Inc. ( DLTR ) shares tumbled 20% on Wednesday after the company revised its annual outlook downward, attributing the cut to significant pressure on its low- and middle-income customers.

This slump follows Dollar General Corporation ( DG ) reducing its full-year forecast, with shares hitting their worst day on record last week.

Also Read: Dollar General ( DG ) Q2 Earnings: Earnings Miss, Slashed Outlook And Shrinking Margins

The dollar store sector is struggling as Walmart ( WMT ) and Target ( TGT ) aggressively lower prices to attract inflation-weary shoppers, impacting foot traffic to dollar stores.

Dollar General ( DG ) CEO Todd Vasos acknowledged that Walmart’s strong performance in attracting budget-conscious shoppers has contributed to the struggles of dollar stores.

“While we believe the softer sales trends are partially attributable to a core customer who feels financially constrained, we know the importance of controlling what we can control,” the CEO said in a press release last week.

Despite historical trends where dollar stores benefited from middle-income households trading down during financial stress, this shift has not occurred recently.

Instead, more affluent customers have increased their spending at Walmart ( WMT ) and Target ( TGT ), further affecting dollar store sales.

David D’Arezzo, a former executive at Dollar General ( DG ), pointed out the close competition between Dollar General ( DG ) and Walmart ( WMT ), noting that when Walmart ( WMT ) performs well, dollar stores tend to face more challenges.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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