With its vibrant green logo and memorable brand name, Dollar Tree has grown into one
of the most successful dollar stores in the business.
Join us as we take a look into how Dollar Tree got to where it is today, and kept prices
so low for so long.
Dollar Tree hasn't always been a variety store giant.
Back in 1953, a man named K.R. Perry opened up a franchise of a Ben Franklin store.
The brand can still found in some small towns across America today, and took its name from
Ben Franklin's aphorism,
"A penny saved is a penny earned."
Later, Perry split his store off from the chain and renamed it K&K 5&10.
And in 1970, he opened up another variety store called K&K Toys with his son Doug Perry.
Through the 70s and 80s, K&K Toys began expanding into malls across the American South, and
Doug Perry went on to co-found the Only $1.00 store.
In the '90s, Perry and his business partners sold K&K Toys, and used the money to expand
Only $1.00, which was rebranded as Dollar Tree in 1993.
In the years since, they've acquired a number of other, smaller dollar store chains, thus
expanding and allowing them to dominate the dollar store niche.
If you've ever set foot in a Dollar Tree, then it'll come as no surprise that some items
are going to run up the bill quite a bit more than you'd expect, especially as the store's
somewhat misleading name suggests that everything there only costs a single buck.
Now, don't get us wrong, lots of items at the Dollar Tree are priced as the name would
suggest.
And even the most expensive items at Dollar Tree only go up to around five dollars or
so.
The store began testing out selling more expensive items in 2019 as part of an initiative called
"Dollar Tree Plus" and items costing more than a dollar were placed in small areas of
the store to differentiate them.
Some of the pricier options include items like body wash, brand name cereals, and three-pound
bags of cat food.
Some stuff just can't be sold for a dollar.
"I'd buy that for a dollar!"
Everyone loves a nice steak dinner, but steak can be pretty pricey.
However, for a steak that won't break the bank, you might be able to grab yourself a
cheap hunk of meat at Dollar Tree.
And unlike the Dollar Tree Plus items mentioned above, these steaks are true to the store's
name, and only cost a dollar each.
According to ABC 13 in Houston, the steaks come frozen and pre-seasoned in brine, and
they're sold by the brand Stampede, which you can find at other major retailers in larger
portion sizes at an extra cost.
Each package apparently comes with two, 3.5 ounce steaks.
That's not a bad deal if you're looking to stock up on a couple cuts of beef and you're
on a really tight budget.
For the record, ABC 13's taste testers said it was not nearly as bad as they had expected,
so if you're in a pinch, these steaks are certainly not the worst option on the market.
If the concept of a dollar store has always sounded too good to be true to you, you're
actually onto something.
It turns out that while most items at Dollar Tree are indeed a dollar, you may actually
end up paying more per unit than you would at a more mainstream retail outlet, according
to shopping expert Clark Howard's website.
Since the vast majority of items at the store are all valued at the same price point, things
seem pretty cheap.
But certain items, like spices and condiments, aren't a great purchase, since you can find
them in larger sizes for less at grocery stores and other outlets.
As noted by Clark,
"But the next time you buy spices, pay attention to the net weight listed on the packaging.
A 2.5 ounce container of garlic powder sells for $1 at Dollar Tree, but a 5.5 ounce container
'more than double the size' is only $1.19 at Aldi."
So for a better deal, you may just want to head on down to your nearest supermarket instead,
and pick up a gallon of milk when you get there.
It's clear that the higher-ups at Dollar Tree aren't facing too many financial hardships.
In fact, CEO Gary Philbin has an estimated net worth of around $25.4 million, and presumably
won't be feeling the need to shop at the Dollar Tree anytime soon.
On the other hand, staff at individual stores aren't so lucky.
As with most other retail jobs, the pay at Dollar Tree is kind of low.
The amount that store workers earn varies by state, but the average pay for cashiers
at Dollar Tree is $9 an hour, which is $2 less than the average hourly pay for a cashier
at Walmart, according to Glassdoor.
As employees work their way up the ladder, they have the opportunity to make a bit more,
though still not that much.
On average, store managers reportedly earn a salary of approximately $44,000 per year.
Just take a quick walk through the aisles of your local Dollar Tree, and it'll quickly
become clear that the company doesn't exactly place all that much emphasis on cleaning.
In 2019, Business Insider ran a story detailing just how messy one Dollar Tree in Jersey City
had become; what they found included randomly assorted products strewn across a disorganized
display table to fallen products laying out in the open on the floors.
But the Jersey City Dollar Tree wasn't alone in its messiness and disorganization.
In early March 2020, the Occupational Safety and Health Administration fined Dollar Tree
for its overwhelming health and safety violations in locations all across the East Coast.
Inspectors have fined the company more than half a million dollars for violations at one
Massachusetts location, and about $300,000 dollars for its violations at one in Pennsylvania.
The offenses were varied, and a number of them were even repeat offenses.
In Pennsylvania, inspectors cited the store for having unsanitary bathroom conditions,
boxes blocking exits, and having uncompressed gas cylinders, among other issues with the
store's maintenance.
In November 2019, CBS News reported,
"Dollar Tree is selling 'potentially unsafe drugs' and cosmetics at its more than 15,000
discount stores, according to federal regulators."
"In some cases, the FDA found unsanitary conditions and lack of testing of what's actually in
the product."
The letter sent to Dollar Tree from the U.S. Food and Drug Administration revealed that
the company had been selling acne treatments that were developed in Shanghai, in a factory
that had been under investigation by the FDA.
Worryingly, the factory was found to use insufficient testing procedures on their products.
One of the other China-based companies supplying Dollar Tree with products got into trouble
with the FDA back in 2017 for not testing its products at all prior to selling them,
as well as reportedly having rodent droppings found throughout its facilities.
A Dollar Tree spokesperson defended the store, explaining that all of the products the FDA
had an issue with were topical, rather than ingestible, but added that they would be working
with the FDA to make sure that all Dollar Tree products met the agency's guidelines
in the future.
As the company's spokesperson told CBS News,
"[Dollar Tree will] ensure our third-party manufacturers are safe."
Dollar Tree managed to expand in large part because of its ability to acquire other dollar
store brands.
One of the company's largest acquisitions was Family Dollar, back in 2015.
According to Inc., Dollar Tree and Dollar General both had a major bidding war over
the struggling Family Dollar chain.
Although Dollar General bid higher than Dollar Tree, Family Dollar eventually sold to Dollar
Tree for a whopping $8.5 billion.
As a result, Dollar Tree was able to increase its number of locations from approximately
5,000 stores in early 2015 to 13,000 after the deal was done.
Although Family Dollar is now owned by Dollar Tree, most Family Dollar locations have not
been converted to Dollar Tree stores.
"We bought Family Dollar with a very specific intent.
Two brands."
Just a couple of years after the company rebranded itself as Dollar Tree, the store went public
on the stock exchange in 1995.
As the company bought out other popular dollar stores, Dollar Tree continued to expand and
make money, but it was in 2008 that it and other dollar stores' popularity went through
the roof.
The Great Recession had people constantly seeking out ways to cut costs.
While stores like Walmart and Target provide plenty of bargains, you can't get much more
cost-efficient than pricing pretty much everything at one dollar.
As the New York Times reported in 2009,
"The nation’s dollar stores [...] are suddenly hot.
[...] And while most big retail chains are closing stores and radically cutting back
on new outlets, the dollar chains are planning to open hundreds of stores this year in some
of the best locations to which they have ever had access."
As a result of the recession, dollar stores grew significantly.
In 2009, Dollar Tree entered the Fortune 500 at 499 for the first time in its entire history,
and it's remained on that list ever since.
In fact, the company has steadily risen in rank, and as of 2019, was sitting at 135 on
the Fortune 500.
And according to Statista, Dollar Tree now has more than 15,000 locations, to boot.
Unsurprisingly, dollar stores tend to be located in regions with high populations of low-income
and working class individuals.
Dollar stores have become extremely common in some of the most low-income cities in America,
like Detroit and Cleveland, the latter of which reportedly had a whopping total of 35
dollar stores within its city limits in 2019.
Consumer watchdog organizations have accused that this business model, of establishing
markets in low-income regions and selling items at a seemingly low cost, preys upon
poor Americans who don't necessarily have access to healthier food items and more expensive
hygiene products.
Speaking with The Progressive, Charles Bromley, who has spearheaded the movement to limit
the development of dollar stores in Cleveland, said,
"Their whole strategy is to go to a neighborhood that has a lot of poor people who don't have
access to transportation and can only walk to and from the dollar store."
As CNN reported in 2019, dollar stores, and in particular Dollar Tree and its main competitor,
Dollar General, have had a strong couple of years financially.
For the most part, they've been able to expand pretty successfully, in spite of organizers
attempting to limit their growth.
But that expansion comes at a cost for the small mom-and-pop shops in the low-income
neighborhoods where you're likely to find more dollar stores then other types of stores,
and also limits access to high quality products to the low-income Americans who live nearby.
As Yahoo Finance reported in March 2020, Dollar Tree and its subsidiary Family Dollar could
begin struggling financially.
That same month, the company reported its financial results for the fourth quarter of
2019, and although the results weren't dire, they weren't anything to write home about.
While Dollar Tree itself saw a sales increase of 1.5 percent, sales at Family Dollar fell
by 0.8 percent.
What's more worrying for the company is the fact that its sales actually saw a major dip
back in 2010 and Dollar Tree has been in a rut ever since.
This drop likely came as a result of the 2008 recession ending.
While buyers shopped at dollar stores out of necessity during the recession, fewer people
felt the need to shop there after the country's economic recovery.
Over the last decade, Dollar Tree has undergone aggressive expansion by opening up new locations
and acquiring Family Dollar, but this doesn't seem to have had much of a positive effect
on the company's sales, according to Yahoo Finance.
While it's unclear exactly what the future holds for Dollar Tree, it's undeniable that
dollar stores struck a chord with Americans.
It's hard to imagine the country without the bargain brand in it.
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