HAIL MARY: A Roman Catholic Prayer (all due respect). The Modern Colloquialism refers to an attempt by a football team in desperation to complete a long pass in the vicinity of the endzone as time runs out. This worked well for the greatest football program of all time ALABAMA, against the Auburn Tigers in the most recent Iron Bowl. DLTR attempted a Hail Mary with an aggressive build out of new stores in markets that would not have been targeted just a few years ago. In the not-so-distant past 1,000 Households was typically the lower end of the threshold for Dollar Stores choosing a new target for store placement. That would be with no other direct competitor in the area. That standard was apparently abandoned by DLTR in the past couple of years. There are now ultra rural trade areas with barely a single traffic light and very low traffic counts that are home to a Dollar General AND a new Family Dollar / Dollar Tree. This is with less than 600 Households. The bet must have been that they would drive the competition out of the market. I can’t imagine the sales projections contemplated happily competing side by side in trade areas that are actually shrinking as far as population. Well – it’s over! FDDT Hail Mary was not successful. While this may not result in NEW stores closing immediately, they will be closing at least 1,000 stores. It’s virtually guaranteed that many of the new Family Dollar / Dollar Tree stores will eventually close. Unprofitable stores with less term will likely close first to avoid as much dead rent as possible. This is interesting to watch as a former Dollar Store Real Estate Manager and current Dollar Store focused real estate advisor. Stay tuned – If you own a Dollar Store you need to know your market, know your store and know where the competitors are. There are many factors that go into a successful location that competes and wins vs one that closes. More to follow.
Contact Dollar Retail National Net Broker Specialist Kevin Whitehead at Sperry-Griffin Partners: 864-243-7777 to discuss your current store lease and if your location is included.