Dueling dollar stores in a small town: why would identical companies share a party wall?

During the season of giving, it’s not likely that most people’s first notion of a repository for seasonal gifts is a dollar store.  Christmas, Hanukkah, Kwanzaa, Festivus, you name it. I suppose I’m making an elitist generalization here: after all, many people lack the wherewithal for purchase gifts anywhere other than a dollar store.  Furthermore, the Scrooges of the world are perfectly fine with pricing their gifts at a place where the merchandise is dirt cheap.  For the majority who fall outside of these parameters, dollar stores are certainly not the preference when other options are available.  But how often are they available?  Across huge stretches of the American interior, the population is so dispersed that the few settlements between the yawning emptiness can support little more than a Dollar Tree or Family Dollar. Or both, resulting dueling dollar stores.  These extreme discounters have become the de facto one-stop shop when income density is too meager even to support a small supermarket—maybe because the population nearby is too poor, but often simply because the population nearby is too sparse.  Not impoverished at all—poverty rates in much of rural America are quite low.  There just aren’t enough buyers, period. 

And conditions like these are what create marketplaces in towns captured by the photo below:

This photo captures the preponderance of buildings in the main street of McKenney, a town in south-central Virginia that has largely hovered around 475 for the last half century.  This part of Virginia—the nation’s 12th most populous state (with approximately 8.7 million people)—appears steadfastly rural, and by most conventional metrics, it is.  McKenney is the only incorporated municipality in Dinwiddie County, since even the county seat (Dinwiddie) is unincorporated and is only marginally bigger.  But Dinwiddie County is technically part of the Richmond Metropolitan Statistical Area, with the northeast part of the county resting within a 30-minute commute of the central city.  McKenney, however, is near the southwest edge of Dinwiddie County and shows no trace of suburbanization.  It’s a small town surrounded by a coniferous woods.

Rural though it may be, McKenney has managed to fend off complete obscurity through one key advantage: it sits less than a mile from Interstate 85, and as such, offers an exit from the freeway with a few basic amenities for motorists: gas stations, restaurants, a bank.  In other words, more eyeballs gaze upon signs for “McKenney” than they would if I-85 were miles and miles away.  The town achieves a rudimentary level of visibility among the thousands of motorists using this stretch of limited-access highway to connect from Richmond to the north with Durham, North Carolina to the south.  And that visibility is enough that a single intersection in McKenney is busy enough to earn a four-way stop with a blinking light.

This hub of activity within McKenney absorbs the intersection of Virginia State Route 40 (which links the town to I-85) and US Highway 1 (which bisects the town and parallels I-85).  At the time of my visit earlier this summer, it featured an auto repair shop, an ice cream parlor, a gas station with convenience, and an Italian restaurant with table service and carryout options.  And, just a few hundred feet away from the intersection stood this recently completed development:

dueling dollar stores in McKenney VA

I won’t try to mislead my audience for long.  It’s probably obvious that I deliberately framed this photo to cut off and conceal certain details—the exact details that attracted my attention towards McKenney in the first place.  If the roadside sign along US 1 does’t make it obvious, a full photo of the building will.

dueling dollar stores in McKenney VA

There it is, almost the equivalent to a residential duplex. Dollar Tree and Family Dollar.  Two competing businesses with little more than a single dividing wall separating them.  Dueling dollar stores.  It’s one thing for competitors to locate a half-mile from one another: retail location decisions are hypersensitive, and such tiny differences can still reveal subtle advantages.  But side-by-side?

dueling dollar stores in McKenney VA

It’s probably not as outrageous as it might seem.  After all, competing gas stations may perch at different corners of the exact same intersection, or even two adjacent parcels on the same corner.  And the two largest competing drug stores—Walgreens and CVS—have never tried to hide their locational rivalry.  It’s almost a cliché to stand in the parking lot of a CVS and look out onto Walgreens, or vice versa.  And who’s going to question the positioning of two-liters of Coke and Pepsi, standing as separate battalions on supermarket shelf within inches of one another?

Taking these examples of market-driven clustering into account, the juxtaposition of two competing deep-discount variety store chains should seem like less of a surprise.  Dueling dollar stores are common wherever dollar stores are common.  But a bit more research reveals a different surprise, at least to those not attuned to the industry.  At the end of 2014, Dollar Tree announced its $8.5B acquisition of Family Dollar, consolidating the two companies’ headquarters in Chesapeake, Virginia, about 100 miles east of McKenney.  (Prior to the merger, Family Dollar’s headquarters had long resided in the Charlotte area.)

For the better part of a decade, Dollar Tree and Family Dollar have been one company with two discrete brands, which elicits a new quandary in terms of how they operate at this new facility in McKenney—conceived as twins all along.  And, for quite some time, only Dollar Tree (the buyer) has abided by the “everything is one dollar” paradigm.  Family Dollar (the acquired) has customarily offered items ranging from $1 to $10.  And, in the last two years, pandemic and inflationary pressures have forced Dollar Tree to raise some of its prices to $1.25 or even $1.50.   But only about 15% of the merchandise at Family Dollar is under $2.

These subtle differences between the two merged brands help explain why this pairing might harmonize better than initially it initially seems.  McKenney does not offer a full-fledged supermarket, but a Family Dollar can offer a reasonable array of food items within its $1-$10 price point, while Dollar Tree can only offer low quantities of single-item food products (e.g., candy bars or certain canned goods).  And it turns out the juxtaposition of dueling dollar stores isn’t just a one-time coincidence—it’s part of a deliberate, growing business strategy.  Dollar Tree and Family Dollar surged in tandem during the pandemic, and the prototype for the combined Family/Tree concept opened in 2019.  A year later, over 50 hybrids were in operation, with the focus being small towns of fewer than 1,000 people—places with insufficient income density to support a Walmart.  Places like McKenney.  (And Walmart certainly manages to cut more deeply into rural America than, say, Target or Kohl’s or Big Lots.)

The dueling dollar stores learned from one another, harnessing this shared understanding to capitalize on markets otherwise ignored by publicly traded national corporations.  It’s not the first subtle strategy I’ve explored.  Many years ago—before the Family/Tree merger—I wrote about how dollar stores deliberately find an important intersection, and then consciously avoid the exact corner, instead closing one or two parcels away from the place where two prominent streets meet.  It’s a smart move because the corner parcel is more expensive real estate, while the focus of the extreme discount variety is cutting costs above all else.  The dueling dollar store hybrid in McKenney did not locate right at the intersection of US 1 and Virginia SR 40.  And, about 1,000 feet down the road, their remaining competitor did the same thing:

Dollar General, still an independent company headquartered just outside Nashville (but one that bid for the acquisition of Family Dollar many years ago—and lost), operates in a free-standing building just down the street, again avoiding the exact corner parcel of the intersection.  That means McKinney, Virginia hosts three dollar variety stores—about one for every 150 people in the town.  These dueling dollar stores obviously serves a bigger trade area, but the clustering means that people throughout southern Dinwiddie County, and the neighboring rural counties, have a node for buying $1 items or $1-10 dollar, as well as a potential competitor.  It’s a comfy niche.

And it’s not the only Family/Tree hybrid, obviously.  This is a growing trend in small towns, as proven about 300 miles to the northwest:

Bruceton Mills, West Virginia shares quite a few features with McKenney.  It’s in a deeply rural part of the Mountaineer State, with its county population hovering around 35,000.  It would be much more obscure if not for the fact that it sits less than a mile from Interstate 68, so, much like McKinney, it offers motorists a variety of amenities if they need a place to pull over.  And among those amenities are the following:

dueling dollar stores in Bruceton Mills, WV

It’s a replica of the dueling dollar store hybrid in McKenney.  But this time, the income density might be even less.  Though my photos above suggest a close-knit walkable little rural village, that’s about all there is to Bruceton Mills: the 2020 census reveals a population of only 64 people, down from 296 in 1980.  But Bruceton Mills still offers a full service hotel nearby, a truck stop, a gas station, at least two banks, and an antique mall.  It looks pretty tidy given all that population loss, which might be more attributable to a change in its incorporated boundaries (a de-annexation) rather than a widespread exodus.  Regardless of the population in “Greater Bruceton Mills”, it offers the right blend of income density and proximity to a major highway to host some dueling dollar stores.

Given the national macroeconomic trends, which prompt penny-pinching amidst consistently high inflation, all of those Dollar Trees, Dollar Generals, and Family Dollars may soon supplant Walmart as the budget shopping archetype.  Sure, these dueling dollar stores don’t feature an electronics or children’s or home & garden department, but across much of rural America, they can still thrive when a 100-square-mile trade area only contains 7,000 people.  Walmarts cannot.  Dollar stores are the golden ticket for capturing vast expanses of the American rural heartland, at least until one of the bigger brands figures a way to scale itself down and offer similar prices.  Walmart, Meijer, Gabe’s, Roses, Ollies’ Bargain Outlet…  I’m not expecting to see any of those competing companies standing cheek-by-jowl in a duplex any time soon.

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12 thoughts on “Dueling dollar stores in a small town: why would identical companies share a party wall?

    1. AmericanDirt Post author

      Yes, the great Commonwealth of Virginia (“Old Dominion”) has some pretty colorful names for its counties: Dinwiddie, Botetourt, Fluvanna, Isle of Wight, Culpeper, King and Queen, PITTsylvania, and my favorite….Goochland. And then some not-so-colorful county names as well (Bland).

      Reply
  1. Kristy Fisher Cassidy

    They revamped a larger Dollar Tree near me and now it has both brands without any kind of dividing wall. One side of the store is Family, the other side is Tree.

    Reply
    1. AmericanDirt Post author

      Methinks you detected the “Family/Tree” pun as well. Yeah, I’ve heard of the parent company (Dollar Tree) doing this, but have never seen an example of it. That may be what the interior look like from the two examples I photographed. I guess that means one side of the store offers items from $1-$10 and the other side is exclusively $1 (or $1.50 these days).

      Reply
    2. Kristy Fisher Cassidy

      quite likely. I haven’t been inside that location yet, but I do visit Dollar Tree now and then for crafting supplies for my Girl Scouts.

      Reply
      1. AmericanDirt Post author

        I decided to do a “reconnaissance” by actually visiting a Dollar Tree. I know I had been to one before, but I have to admit the Big Three dollar store chains all kind of bled together in my mind until I did the research for this article. I went to a place that was exclusively labeled “Dollar Tree”–not a hybrid.

        Contrary to my research, Dollar Tree does feature a section with items priced from $2 to $5–a few aisles in the middle, at least the location I visited. But I’d still say the overwhelming majority is just $1 (or $1.50 as adjusted per inflation) which no doubt a great deal for what you were seeking, compared to pricier alternatives like Michael’s and Hobby Lobby (which I’ve also seen side by side). And Family Dollar is primarily items up to $10, with a handful of things priced exclusively at or around $1.

        In other words, the distinct concepts of the two are slowing seeping into one another. No big surprise, since they’re owned by one company. It’s possible in a few years they end up eliminating the brand that has the lower visibility or less favorable public perception.

        Reply
  2. Astara

    Dollar stores have become a sort of “general store.” Our area of southern Volusia County here in Florida is pretty saturated with all three brands. I continue to be fascinated by their growth.

    Reply
    1. AmericanDirt Post author

      All of the “big three” dollar store companies are based in the south, so it’s no shocker that they have a ton of them down there. I noticed that they seemed to be everywhere during my time in LA and MS, probably because income density was low in these rural states (due in part to sparse population and also to low incomes). Now it seems like they’re almost as prevalent in rural parts up north–not that Virginia and West Virginia are exactly Yankee-land.

      Reply
    1. AmericanDirt Post author

      yep, for the last several years, they have been one company with two separate brands. It’s quite possibly one big room on the inside.

      Reply
  3. Chris B

    In older suburbs around your hometown it is not unusual to see one or the other dollar store chain take over a vacated strip mall CVS or Walgreens.

    (Vacated back a couple decades, when those chains were shifting from strip mall anchor slots to freestanding stores. Often right across the street, as at SR135/South Meridian and County Line Rd.)

    Of course, with both drugstores in shrink mode, even the (closed) freestanding drugstores are now being converted, though not typically the ones on prime corners. Stop 11 and Emerson even has adjacent closed CVS stores; I haven’t neen by in more than a year, so for all I know one or both might be a dollar store by now.

    Reply

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