If you‘ve ever found yourself wondering whether Dollar General owns Dollar Tree, you‘re not alone. The two largest dollar store chains in the United States have a lot in common, from their names and signage to their focus on rock-bottom prices and no-frills shopping experiences.
However, the truth is that Dollar General and Dollar Tree are completely separate companies and fierce competitors in the discount retail space. In this deep dive, we‘ll untangle their complex relationship, walk through the key similarities and differences between the chains, and offer expert tips on how to make the most of your dollar store shopping.
Tracking the Growth of Dollar Stores
First, let‘s set the stage with some context around the dollar store industry‘s explosive growth in recent years. Dollar stores have been one of the few bright spots in brick-and-mortar retail as e-commerce disrupts traditional business models and consumer spending habits evolve.
According to research firm Coresight Research, the top three dollar store chains (Dollar General, Dollar Tree, and Family Dollar) operated a combined total of over 32,000 stores across the U.S. as of 2020, up from just 20,000 a decade earlier. For comparison, Walmart, the world‘s largest retailer, has around 4,700 stores in the U.S.
Several factors have fueled the rise of dollar stores, including:
- The aftermath of the Great Recession, which made budget-conscious shopping a necessity for many households
- Stagnant wage growth and rising income inequality, especially among rural and lower-income consumers
- "Retail deserts" in economically disadvantaged areas with limited access to grocery stores and big box retailers
- Aging populations on fixed incomes looking to stretch their spending power
- The demise of other discount chains like Kmart and Sears, which created market share opportunities
"Dollar stores have capitalized on some powerful long-term demographic and economic trends," said Craig Johnson, president of retail consulting firm Customer Growth Partners. "In good times, people are looking for value and convenience. In bad times, they‘re looking for even more value and convenience."
By the Numbers: Dollar General vs. Dollar Tree
To illustrate the scale and scope of the dollar store giants, let‘s compare some key metrics:
| Metric | Dollar General | Dollar Tree |
|---|---|---|
| Annual Revenue (2021) | $34.2 billion | $25.5 billion |
| Store Count (2022) | 18,356 | 16,231 |
| Average Store Size | 7,400 sq. feet | 8,000-12,000 sq. feet |
| Number of States | 47 | 48 |
| Number of Employees | 158,000 | 193,100 |
| Year Founded | 1939 | 1986 |
Sources: Company financial reports and press releases
As you can see, Dollar General has the edge in terms of revenue and store count, while Dollar Tree has slightly larger stores on average and a small presence in Canada. Despite their differences, both chains have established themselves as major forces in retail with nationwide reach and billions in annual sales.
A Tale of Two Business Models
So how did Dollar General and Dollar Tree come to dominate the dollar store landscape? The answer lies in their distinct histories and business strategies.
Dollar General traces its roots back to 1939, when J.L. Turner and his son Cal Turner Sr. opened J.L. Turner and Son Wholesale in Kentucky. The company didn‘t adopt the Dollar General name until 1955, when Cal Turner developed the concept of a dollar store where no item cost more than $1.
From these humble beginnings, Dollar General has grown rapidly through a combination of strategic acquisitions, organic store growth, and operational efficiencies. The company went public in 1968 and joined the S&P 500 index in 1998. Today, under CEO Todd Vasos, Dollar General is laser-focused on expanding its footprint in rural and underserved markets where it faces less competition from the likes of Walmart.
While Dollar General started out as a true dollar store, the company has gradually shifted to a more flexible pricing model to expand its product assortment and drive higher margins. In 2021, only about 20% of Dollar General‘s merchandise was priced at $1 or less. The chain still emphasizes value, but with a wider range of price points up to $10 or more.
"Dollar General really isn‘t a dollar store anymore in the literal sense," said Vincent Sinisi, a retail analyst at Morgan Stanley. "The key is that they sell products at low price points and convenient locations that meet customers‘ needs. The ‘dollar‘ in the name is more about positioning and perception."
Dollar Tree, on the other hand, has stuck more closely to the single price point model since its founding in 1986. The company, originally called Only $1.00, was started by Macon Brock, Doug Perry, and Ray Compton in Dalton, Georgia.
Dollar Tree expanded quickly in its early years, going public in 1995 and making a series of acquisitions to build scale, including Dollar Bill$, Dollar Express, and Deal$. By the mid-2000s, Dollar Tree was the clear leader in the single price point retail category, with a focus on suburban strip mall locations that complemented its sister company Family Dollar‘s urban store base.
In 2015, Dollar Tree made its biggest move yet with the $9.1 billion acquisition of Family Dollar, beating out a rival bid from Dollar General. The deal nearly doubled Dollar Tree‘s store footprint overnight but also came with challenges around integrating two distinct corporate cultures and improving Family Dollar‘s lagging performance.
Since then, Dollar Tree has worked to remodel and rebanner many Family Dollar locations, streamline its supply chain and merchandising functions, and sharpen its pricing strategy. The company raised its threshold for the first time in 2021 to $1.25, but still maintains a single price across all items.
"Our primary goal at Dollar Tree is to deliver a consistent, elevated shopping experience for our customers," said CEO Mike Witynski in a recent interview. "This means keeping things simple, providing a curated selection of quality products, and offering exceptional value."
Same But Different
To the casual observer, it can be hard to tell Dollar General and Dollar Tree apart. Both chains feature bright, colorful signage, aisles packed with household essentials and impulse buys, and of course, lots of references to the word "dollar."
There‘s no denying that Dollar General and Dollar Tree have a lot in common in terms of their overall business models and customer value propositions. Some key similarities include:
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Emphasis on price: Both chains use the promise of steep discounts and simple pricing to draw in value-seeking shoppers. While Dollar Tree is more strictly tied to the $1 price point, Dollar General still aims to be the low-cost leader in its categories.
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Focus on consumables: Shelf-stable food, snacks, cleaning supplies, paper products, and health and beauty aids make up the core product mix at both Dollar General and Dollar Tree. These everyday essentials drive frequent repeat visits and consistent traffic.
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Small store format: Dollar stores typically have a much smaller footprint than traditional grocery or big box stores, which allows them to open more locations and keep overhead costs down. The average Dollar General is around 7,400 square feet, while Dollar Tree stores range from 8,000-12,000 square feet.
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Low-income target customer: Dollar stores have thrived by catering to budget-conscious households with limited disposable income. The chains often locate stores in rural or urban areas with fewer retail options and lower median incomes.
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Treasure hunt atmosphere: Both Dollar General and Dollar Tree sprinkle in some surprises and unexpected finds, from seasonal decor to toys and electronics, to encourage shoppers to browse the whole store. The goal is to create a "treasure hunt" experience that drives impulse purchases and larger baskets.
However, there are also some notable differences between the two chains that are worth highlighting:
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Pricing strategy: As mentioned, Dollar Tree is committed to a single price point of $1.25 for all items, while Dollar General offers a range of prices up to $10 or more. This gives Dollar General more flexibility to expand its assortment and adjust to cost pressures, but also means customers have to pay closer attention to individual price tags.
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Geographic focus: Dollar General has a larger presence in rural areas and small towns, with about 75% of its stores located in communities with fewer than 20,000 residents. Dollar Tree has a more even mix of rural and suburban locations, often in strip malls anchored by grocery stores or pharmacies.
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Store layout and design: Dollar Tree stores tend to have a tidier, more organized feel with wide aisles and tall shelves to maximize space. Dollar General has been updating its store layout in recent years but still has a more cluttered, packed-to-the-gills atmosphere.
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Ownership structure: Dollar General is an independent publicly-traded company, while Dollar Tree is owned by the holding company Dollar Family (along with Family Dollar).
For shoppers trying to stretch their budgets, dollar stores can be a valuable resource for affordable everyday essentials and the occasional splurge. But with so many dollar stores out there, it helps to have a strategy to make the most of your shopping trip.
Here are some tips from retail experts and savvy dollar store shoppers:
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Make a list: Dollar stores are designed to encourage impulse buys, so it‘s easy to get carried away. Having a list of specific items you need can help you stay focused and avoid overspending.
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Compare unit prices: While dollar stores are known for low prices, they‘re not always the cheapest option. Use your phone to compare unit prices (price per ounce, pound, etc.) to other retailers, especially for staples like toilet paper or cleaning supplies.
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Check expiration dates: Some dollar stores sell closeout or near-expiration merchandise to keep costs down. While this can lead to great deals, be sure to check expiration dates on food, medicine, and personal care items before buying.
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Look beyond the checkout aisle: Dollar stores are notorious for filling the checkout area with candy, toys, and other impulse items. Resist the temptation and stick to your list to save money.
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Don‘t assume everything is a deal: Just because an item costs $1 doesn‘t necessarily mean it‘s a bargain. In some cases, you might be better off buying a larger size or higher quality version elsewhere.
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Take advantage of loyalty programs: Both Dollar General and Dollar Tree offer digital coupons and rewards programs that can help you save even more. For example, Dollar General‘s DG Digital Coupons let you load discounts directly to your phone and redeem them at checkout.
The Future of Dollar Stores
Despite their impressive growth over the past few decades, dollar stores face some challenges and uncertainties as they look to the future.
One issue is rising costs and supply chain disruptions, which have put pressure on dollar stores‘ already thin margins. Dollar Tree cited higher freight costs and a tight labor market as reasons for its decision to raise prices to $1.25 in 2021. Dollar General has also had to get creative with sourcing and pricing to maintain its value proposition.
Another challenge is increased competition, both from rival dollar chains and other value-oriented retailers like Aldi, Lidl, and Walmart‘s smaller format stores. Dollar stores will need to continue differentiating themselves through convenient locations, curated assortments, and exceptional value.
At the same time, dollar stores have some opportunities to expand their appeal to younger, more digitally savvy shoppers. Both Dollar General and Dollar Tree have been investing in e-commerce capabilities and mobile apps to complement their brick-and-mortar stores. They‘re also experimenting with new store formats and product categories to attract a broader range of customers.
"The dollar store segment has proven to be incredibly resilient and adaptable over the years," said Randy Hare, director of equity research at Huntington Bank. "While there are certainly risks to the business model, I wouldn‘t bet against these companies‘ ability to evolve and meet changing consumer needs."
The Bottom Line
Dollar General and Dollar Tree may seem interchangeable at first glance, but they are actually distinct companies with their own unique histories, strategies, and identities. While they compete fiercely for budget-conscious shoppers‘ dollars (pun intended), they also have some key differences in terms of pricing, product mix, and store experience.
As a savvy shopper, it pays to understand these nuances and approach each chain with a tailored game plan. By using coupons and rewards programs, comparing prices, and staying focused on your shopping list, you can unlock the full value potential of dollar stores without busting your budget.
Whether you‘re a die-hard Dollar Tree fan or a loyal Dollar General shopper, there‘s no denying the impact these chains have had on the retail landscape over the past few decades. As they continue to adapt and evolve in the face of new challenges and opportunities, one thing is clear: the mighty dollar store is here to stay.
