In recent years, dollar stores have faced a variety of novel challenges. In the years after the 2008 economic crash, dollar stores were one of the few industries that outperformed the average and were able to grow consistently. However, this prosperity didn’t last, and dollar store chains now face rising operating costs, tight margins, and mass closures.
While brands focused on launching new stores, they frequently neglected individual locations and supply chains. Many dollar store locations and their warehouses around America are unprofitable and rife with safety issues. Recently, these problems came to a head in a health and safety lawsuit targeting a Family Dollar warehouse that cost the company $40 million.
If dollar store chains are going to survive, they need to reduce their costs—not by cutting corners, but by eliminating unnecessary expenses like workforce inefficiency, preventable delays, worker injury, and damaged merchandise. This is where FHI’s range of logistics and labor solutions, such as on-demand labor, come into play. Instead of spending weeks or months recruiting, hiring and training employees, you can get highly experienced, specialized labor in a matter of days.
The dollar store industry was already fragile, and many economic trends in recent decades have hit them hard. Political rows over trade, disrupted supply chains, and record-breaking inflation have all hurt dollar stores.
This is a new kind of bad economy; instead of driving middle-income consumers to dollar stores, inflation and supply chain issues are attacking dollar stores’ bottom line. Optimizing supply chain efficiency with FHI offers a near-immediate way to reduce costs while improving results to make dollar stores more resilient.
The first challenge that struck dollar store supply chains was the China-US trade war. Dollar stores rely heavily on Chinese products to offer low prices, which makes them among the worst hit by tariffs and counter-tariffs. At the height of the trade dispute, Dollar Tree cited rising costs of Chinese goods as the main factor forcing them to abandon the $1 price point in 2019.
To make matters worse, the drastic reduction in economic activity in 2020 threw supply chains into chaos. When economic activity began regaining steam in 2021 and beyond, supply chains were overtaxed and struggled to keep up with demand. This contributed to global inflation, and then Ukraine War-related reductions in the food and energy supply increased inflation on virtually all goods. The cost of labor has risen as well, driving further increases in inflation.
These challenges impact virtually all businesses, but dollar stores, with their small margins, are hit the worst. The essentials that face the worst inflation rates are typically their primary sources of revenue. Raising prices is unappealing, as it’s likely to drive customers to conventional retail stores.
While inflation demands price increases, the dollar store business model is based on offering the lowest price possible. The clearest way for dollar stores to protect their profit margins is by reducing costs, such as with efficient supply chain management. However, this path carries its own challenges.
All retailers work with supply chains but often view them as external to their business. This neglect of logistics has played a key role in Family Dollar's decline and directly resulted in the company losing a $40 million lawsuit. This is why dollar store chains should embrace strategic vendor relationships to offer practical, immediate solutions to critical problems.
Even when companies prioritize logistics, this area is often outside their core competencies. This is why strategic vendor relationships are a must to overcome supply chain challenges for dollar stores. Specialized vendors can bring transformative knowledge and capabilities to a supply chain.
For instance, companies that still want to run their own logistics can benefit from many of FHI’s logistics support services. These include audits, which find and offer solutions to the kind of health, safety, and efficiency problems that resulted in the $40 million Family Dollar lawsuit.
FHI is distinctively positioned to manage dollar stores’ supply chains efficiently. As an American company with 30 years of success in logistics, FHI can handle every leg of your logistics. From sourcing to transportation and efficient unloading, you can develop a customized, comprehensive supply chain solution with FHI. Customers can also incorporate FHI’s services to supplement the elements of their supply chain that work.
Want to know more about the FHI way?
Faulty inbound logistics for your stores can result in slow unloading, merchandise damage, and safety-related lawsuits. FHI maintains an experienced time-tested team of professionals with a results-based compensation model. This level of expertise and motivation reduces your loss expenses, streamlines operations, and ensures reliability in your supply chains.
Inbound logistics services include:
Half of logistics is delivery, while the other half is supply chain management. FHI excels at expert outbound logistics management for fast, efficient results. Outbound logistics services include:
If you want to refine your existing logistics solutions, FHI can help. Detect and resolve supply chain crises before they get out of control with an audit or rationalize logistics by delegating key tasks to FHI.
Logistics support services include:
Dollar stores have navigated a series of challenges in recent years, and many hurdles are expected to continue into the foreseeable future. To mitigate these challenges, leveraging logistics expertise and outsourced managed labor is essential. These strategies not only cut costs but also enhance operational efficiency, setting the stage for success in today’s economic landscape—and FHI is here to help.
At FHI, we know hard work—Hard Work Done Right. As dollar stores continue to face mounting challenges from economic pressures to logistics inefficiencies, partnering with an experienced logistics provider isn't just an option; it's a necessity. FHI stands ready to deliver customized, efficient, and cost-effective solutions that streamline your supply chain operations and optimize performance.
Whether you need support in inbound logistics, outbound management, or a comprehensive audit to pinpoint potential improvements, our team of seasoned professionals is here to ensure your logistics setup is robust and resilient. Don't let logistics challenges slow down your growth. Reach out today to learn how FHI can transform your supply chain into a strategic asset that drives your business forward. Contact us to discuss your needs and start your journey toward streamlined logistics and enhanced profitability.
In any market, your supply chain can make or break your ability to compete well. Don't leave that to chance. We can help you create a stronger operation, so you never fall behind the competition.
Stop worrying about labor challenges and start enjoying a safe, lean, and rock-solid supply chain.
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