Last week, bargain retail favorites Dollar Tree, Family
Dollar, T.J. Maxx, and Goodwill made headlines with big announcements that
rattled the discount shopping world.
- First, Dollar Tree announced
its plans to purchase its rival, Family Dollar, for $8.5 Million dollars.
- Then, analysts
projected that T.J. Maxx will take Macy’s spot on the leaderboard for retail
- Finally, Federal authorities contacted
Goodwill to launch an investigation about a potential credit card breach.
With Q4 Holiday shopping season right around the corner, how
will these announcements effect money-savers, discount retail shoppers, and consumers
looking for great deals? The Daily Deduction takes a deeper dive.
What Happens When Dollar Tree and Family Dollar Join Family Trees?
As it stands today, Dollar Tree stores are mainly found in
suburban areas, while Family Dollar stores are typically found in urban and
rural areas. After the two companies
merge, the chains will have more than 13,000 locations that serve all area
densities and an annual revenue of $18 billion. The merger is unlikely to
drastically affect Q4 sales, as the deal is expected to close during Quarter 1
As discount shoppers, we hope this means good news for the
product mixes found in Dollar Tree stores in 2015. Family Dollar typically offers a mix of
quality name-brand pet supplies, groceries, apparel, and health and beauty
products. Family Dollar also offers a
wider variety of seasonal, home and garden, and greeting card items than Dollar
Tree does today. Dollar Tree features a
popular selection of decorative household items, cleaning supplies, craft and
home office supplies, automotive, books, dairy items, baked goods, and frozen
foods. In an ideal world, combining the
product selections of the two discount chains might finally create the discount
haven we’ve been searching for.
In the real world, we can expect that overlapping product
lines will merge, phasing out some lines and offering few options for similar
products. How will the pricing model change? Dollar Deals—another Dollar Tree
owned store—already sells Dollar Tree’s national and private-brand offerings at
prices that are $1 and up. Will the Family Dollar stores join the Dollar Tree
lineup in this same capacity?
T.J. Maxx Sales Up, Plans to overtake Sales Lead Over Macy’s
T.J. Maxx is making a bigger name for itself as reports of
sales demonstrated an increase. Annual
sales projections lead analysts to believe that T.J. Maxx will beat Macy’s in
retail sales soon.
when discount retailers overtake the vendors that they purchase from? Some
posit that vendors will reduce shipments to discount stores or stop selling to
them altogether. In the case of T.J.
Maxx, the discount retailer shares its success with the vendors. According to Fortune, vendors strategically
supply T.J. Maxx with excess product so that both retailers can make money. As
demand for T.J. Maxx products soars, so do the profits of suppliers. Under this strategy, vendors broaden their
market reach and create brand fans.
These brand fans help engender competition between retail stores.
Possible Credit Card Breach at Goodwill Dates Back to 2013
According to a statement on Goodwill’s website, Federal
authorities and a fraud investigative unit contacted Goodwill late in the
afternoon last Friday about a potential credit card number theft. This incident
is currently under investigation.
Sources claim that the pattern of fraud on cards previously
used at Goodwill can be traced across at least 21 states. The same source says
that this breach could have begun in the middle of 2013.
If the investigation does uncover a credit card breach,
Goodwill will be following in the footsteps of five large retailers and
restaurants—Target, Neiman Marcus, Michaels, Sally Beauty, and P.F. Chang’s—who
have recently had major data breaches.
As a small, non-profit organization, Goodwill could have
become a target for cybercriminals because it fits the profile for an
organization that does not spend as much to protect themselves against
cybercrimes as larger companies do.
Goodwill Industries International features discount
storefronts that collect and then sell donated clothing and goods. The company then uses the proceeds to make a
difference in their local communities by helping partners find competitive
employment. Goodwill Industries International has 2,900 stores and 165 regional
headquarters across the United States and Canada and made over $3.9 billion in
retail sales last year. According to Goodwill’s Director of Public Relations, Goodwill
has no centralized point-of-sale system.
For now, shoppers should be careful about using credit cards
at Goodwill and monitor their account balances carefully if they have recently made
purchases at a Goodwill store.
Will the impending investigation mean that Goodwill spends
more on cybersecurity? Spending more
overhead might mean that the already-higher priced thrift store (among
competing non-profit thrift stores) might have to raise their prices or (in
some locations) reduce or eliminate color of the week discounts.
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