Discount Stores Are Struggling As Persistent Inflation Wreaks Havoc On Low-Income Americans

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Will Kessler Contributor
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Discount stores are having trouble selling discretionary goods as low-income Americans are forced to cut back on spending as prices rise with inflation and crime, according to The Wall Street Journal.

Consumers are having to give priority to buying necessities at stores like Dollar General and Dollar Tree, with the companies’ stock prices dropping 5.1% and 14%, respectively, following each of their fourth quarter earnings calls due to disappointing sales and declining investor confidence, according to the WSJ. Dollar Tree and its subsidiary, Family Dollar, will be closing over 1,000 stores over the next few years in an attempt to boost profits as costs rise and consumers pull back. (RELATED: Adidas Gives Warning For American Market After Posting First Loss In Three Decades)

In Dollar Tree’s fourth quarter earnings call on Wednesday, the company’s CEO, Rick Dreiling, noted that the economic environment has been tough for the business recently and that there have been high shrinkage numbers, which refers to product losses, including theft, according to the WSJ. Dollar General announced on its earnings call on Thursday that the company would be eliminating self-checkout at its stores, which have the highest rates of theft, while adjusting the flow of people to staffed registers at other stores.

The consumer price index, which measures the inflation of prices consumers pay, rose 3.2% in February, far from the Federal Reserve’s 2% target, with prices having increased 18.5% since President Joe Biden first took office in 2023. Prices paid by companies and suppliers increased by 0.6% month-to-month in February, far higher than expectations of 0.3%, as businesses also struggle with rising costs.

Retail sales have continued to slump in recent months as consumers pull back on spending, growing 0.6% in February and 1.5% from a year ago, but are not adjusted for price increases from inflation, according to a report from the Census Bureau. Retail spending declined 1.1% month-to-month in January.

Dollar Tree and Dollar General did not immediately respond to a request to comment from the Daily Caller News Foundation.

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