One interesting thing about shopping at Family Dollar and Dollar Tree is the fact that you get to get fresh and high-quality home and general products without having to break the bank. Oftentimes due to this interesting thing, people tend to assume the stores all have the same owners from the start. However, this is not accurate Family Dollar only recently became a part of the Dollar Tree brand. Let’s know ‘Does Dollar Tree Own Family Dollar?’
Following a $9.2 billion acquisition of Family Dollar by Dollar Tree Inc. in 2015, Family Dollar joined the Dollar Tree brands. This strategic acquisition made Dollar Tree the largest retailer in the whole of North America, having over 13,000 stores.
About the Parent Company (Dollar Tree Inc.)
Formerly known as “Only $1.00,” Dollar Tree Inc. is one of the largest stores in North America. When Dollar Tree began operation, it used to offer products to customers at just $1.00, this gave the brand quite a popularity in America. Eventually, the brand, while working on expansions had to change its name from “Only $1.00” to “Dollar Tree” in 1993. Just as you could have guessed, the change of the brand name also affected their prices; to meet up with their expansion policies, prices of products had to be increased from $1.00 to $1.25. The headquarters of Dollar Tree Inc. is located in Chesapeake, Virginia.
About Family Dollar
Family Dollar was founded in 1959 by a young entrepreneur, Leon Levine who was only 21 years as at the time of launching this brand. Just like their parent company, Family Dollar offers quality family products at affordable prices. The retail store provides items at prices from $10 below to their customers. The affordability of their items attracts many customers to their store.
What Dollar Tree Plans to Achieve with the Acquisition?
In July 2014, the CEO of Dollar Tree, Bob Sasser while giving a statement on the reason Family Dollar’s acquisition was necessary explained what the company hoped to achieve from the acquisition. He stated that the acquisition provides them with a transformational opportunity to offer a variety of products, values and also aid them in reaching out to low-income customers.
“This acquisition will extend our reach to low-income customers while strengthening and diversifying our footprint. We plan to leverage best practices across both organizations to deliver significant cost synergies. Combined, our growth potential is enhanced with improved opportunities to increase store productivity and to open more stores across multiple banners.” Sasser said.
In line with Bob Sasser’s statement on the acquisition of Family Tree, here are some of the things Dollar Tree Inc. has achieved through this acquisition include;
- Become a Leading Discount Retailer in North America.
The merger allows Dollar Tree Inc. to get access to Family Tree’s market and also use that to their advantage, thereby gaining more ground in US discount retail. Remember that Dollar Tree had been able to build a customer base using the $1.00 price strategy, acquiring Family Tree will help them gain more customers from the brand. The two mergers also birthed the largest discount retailing store in North America; combined, Dollar Tree Inc. has over 13,000 stores in 48 states across the United States and Canada.
- Creating a More Effective Business Model
Dollar Tree is known for its consumable and seasonal merchandise, while Family Tree is known for its consumable and family products. Through the merger, Dollar Tree hopes to achieve some more stable and diverse product categories which would also fit into low prices.
- Growth
As it is commonly known, the most important advantage of any form of financial investment is growth. Growth can be through making more financial gains, expanding to new locations, introducing new products, and so on. Dollar Tree worked on investing in existing and new markets which will help in growing the company. The merger with Family Tree generates more cash flow which will enable the parent company, to pay up debt and enforce effective management strategies for both companies.
- Increased Market Size
The merger created an opportunity for Dollar Tree Inc. to be able to target a wider range of consumers. For instance, Dollar Tree’s target customers are the middle-income earners while Family Tree’s target customers are the low-income earners. Having the two companies together under one management increases the market size of Dollar Tree Inc.
Conclusion
Introducing the $1.25 price strategy affected Dollar Tree Inc., especially in relations with many customers who had placed high hopes on the brand’s former $1.00 price. The best way Dollar Tree Inc. had to deal with this was to acquire Family Dollar. Although the acquisition is a strong way for the latter to retain their position in the American retail market, they also had to pay a huge price for this; about 390 Family Dollar stores will be closed and 1,000 renovated to be able to survive the management cost.
Frequently Asked Questions
1. Who founded Family Dollar?
Leon Levine founded the first Family Dollar in the year 1959.
2. Does Dollar Tree Items still cost $1.00?
Unfortunately, the discount store chain announced in 2015 that items would be increased from $1 to $1.25.
