Dollar Tree is Opening Additional Stores Amid Increased Demand

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On Wednesday, Dollar Tree announced that it plans to open 600 new stores this year to keep up with increasing demand.

Discount retailers have been thriving amid the pandemic as consumers have been wary to overspend in harsh economic conditions. Furthermore, Dollar Tree revealed that sales at stores open more than a year increased 4.9 percent year-over-year for the fourth quarter.

Dollar Tree also owns the Family Dollar discount retailer. It plans to open 400 Dollar Tree stores and 200 Family Dollar stores this year creating thousands of jobs. As of right now, the Dollar Tree name has around 15,700 US locations.

Dollar Tree has been trailing behind rival Dollar General recently. Dollar General has been actively opening around 1,000 stores a year and has around 16,000 US locations. Both companies target low to middle-income consumers in rural and suburban areas. Dollar Tree is now exploring the idea of new "combination stores" that would include elements of both Dollar Tree and Family Dollar.

Analysts like the idea of combining both appealing aspects of the stores. "Dollar Tree generally has a better customer perception so it helps to brand the store with that banner, but the markets the company is targeting seem best served by Family Dollar," Joseph Feldman, analyst at Telsey Advisory Group, said. "The small markets Dollar Tree is targeting are underserved, which is why they are going after them."

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