A bad economy should, in theory, push people to shop at value-based chains rather than traditional retailers.
For chains like Costco and Walmart, which have steadily reported sales increases, that’s true, but other chains have suffered, despite offering low-cost items.
And while some retailers have positioned themselves as being value brands, they’re not actually cheaper. That’s something GlobalData Managing Director Neil Saunders has accused Family Dollar of.
“As we have noted before, one of the problems with Family Dollar is that prices are not particularly competitive and this situation has worsened as other players, like Walmart, are investing more in keeping their own prices low,” he told Retail Dive. “This has lost Family Dollar even more customers.”
The retailer’s pricing problems have contributed to its broader struggles as it has closed hundreds of stores over the past 12 months.
Family Dollar has been closing stores
Family Dollar no longer reports its sales since it was acquired by private equity firms Brigade Capital Management and Macellum Capital from Dollar Tree in July 2025.
During the chain’s fourth-quarter 2023 earnings call before it sold the chain, former Dollar Tree CEO Rick Dreiling explained why Family Dollar was struggling.
“Persistent inflation and reduced government benefits continued to pressure the lower-income consumers that comprise a sizable portion of Family Dollar’s customer base,” he said.
He shared where the chain was seeing reduced spending from that customer base.
“Categories like apparel, home decor, electronics, and general merchandise remain weak as lower-income consumers continue to be very deliberate about their spending,” he added.
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Dollar stores aren’t always cheaper
We had a Dollar General near our former Orlando-area vacation home, which, like many stores with the word “dollar” in the name, does not strictly sell items at that price point. I visited it fairly often as it sold items in small quantities, but at generally higher prices than buying in more traditional sizes.
That’s something retail analyst Garrick Brown, formerly of Cushman & Wakefield, called out.
“Dollar stores are a poor substitute for grocery stores. A typical dollar store carries no fresh produce, only a limited selection of processed foods. And they aren’t necessarily less expensive. Packaged in single-serving quantities, their food offerings have lower price points, but are often more expensive per ounce,” he said.
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That’s something Fortune also showed when it examined dollar store prices.
A Fortune analysis found that essentials at dollar stores can cost more per unit than at major retailers. For example, it compared Dove soap at Dollar General and Target: The Dollar General package had a lower total price, but the Target package was cheaper per ounce.
Family Dollar has closed 350 stores in 12 months
Family Dollar’s plans to close stores originated with Dollar Tree, but they have accelerated under the chain’s new owners.
At least 350 stores closed between July 2025 and May 2026, according to a Local Falcon analysis.
RTM Nexus CEO Dominick Miserandino puts most of the blame on the chain. “It’s a combination of both neglected stores and a consumer who’s finding things are even tighter,” he told TheStreet.
Family Dollar also faces problems caused by the economy.
“And inflation is causing those lower-cost goods to be even tighter on the margin. All three of those are smacking together,” he added.
Related: Discount grocery chain closes 12 stores after expanding too fast
