The untold truth of Dollar Tree

Dollar stores are everywhere. Descended from the popular five and dime variety stores of the 19th Century, they're sort of an American staple, even if they might be — for some shoppers with more discerning tastes — quite tacky. Adjusted for inflation, the five and dime became the dollar store. And it makes sense that they've become so widespread — where else can you buy skincare products and steaks at just a buck a piece? It's a no-brainer that they're super convenient. Of course, the quality of those products might not be all that great, but hey, you get what you pay for, right?

With its vibrant green logo and evocative brand name, the Dollar Tree has grown to the top as one of the most successful dollar stores in the business. The industry powerhouse has been around since the early 1950s, and, along with other major names like Dollar General and 99 Cents Only Stores, Dollar Tree has become emblematic of American consumerism since its inception. As it's such a big name, it's worth looking into how the Dollar Tree got to where it is today, how they make their money, and how they've managed to keep prices down so low for so long. (Seriously, how the heck is dollar store food that cheap?)

It started out as a little mom and pop shop

Dollar Tree hasn't always been the variety store giant we know it as today. Back in 1953, per the company's website, a man named K.R. Perry opened up a franchise of a Ben Franklin variety store — Ben Franklin (which is still around in some small towns across America today, in case you were wondering) was a chain of discount arts and craft stores that took its name from ol' Ben Franklin's aphorism, "A penny saved is a penny earned."

Later, K.R. Perry split his store off from the chain and renamed it K&K 5&10; he opened up another variety store called K&K Toys with his son Doug Perry in 1970. Through the 70s and 80s, K&K Toys began expanding out into malls across the American South. Doug Perry then went on to open his own stores with a model similar to that of the classic five and dime his father opened back in Norfolk — a store that sold everything for one dollar, fittingly titled "Only $1.00."

In the 90s KB Toys bought out K&K Toys from Perry and his business partners; they used the money to expand Only $1.00, which became the Dollar Tree in 1993 — and it's history from there. In the years since, they've acquired a number of other smaller dollar stores, thus expanding their infrastructure and allowing them to dominate the dollar store niche.

Not everything there's a dollar anymore

If you've ever set foot in a Dollar Tree (and let's be real here, who among us hasn't set foot in a Dollar Tree?), then this one should come as a no-brainer: some items are going to run up the bill quite a bit more than you expect them to, considering, well, you know, the store's somewhat misleading name suggests that everything there only costs a single buckaroo.

Now, don't get us wrong — a lot of items at the Dollar Tree are priced as the name would suggest. In fact, according to Retail Leader, most of them are actually priced as you'd expect them to be. And to be fair, even the most expensive items at Dollar Tree only go up to around five dollars or so.

The store began testing out selling more expensive items in 2019 as an initiative called "Dollar Tree Plus" — items costing more than a dollar were placed in small areas of the store to differentiate them from the rest of the discount items. The pricier options include items like three pound bags of cat food, body wash, and brand name cereals. Some items sold at the dollar store are just bizarre, though, no matter what price they have.

They sell $1 steaks in the freezer section

Of course, we all love a nice steak dinner. But then again, steak can be pretty pricey — for a steak that won't break the bank, you might be able to grab yourself a cheap hunk of meat at the Dollar Tree — unlike the Dollar Tree Plus items mentioned above, these steaks are in fact, true to the dollar store's name, only costing a buck a piece.

According to ABC 13 in Houston, the steaks come frozen and pre-seasoned in a brine — they're sold by the brand Stampede, which you can find at other major retailers in larger portion sizes for a bit extra. Each package apparently comes with two, 3.5 ounce steaks. That's not a bad deal if you're looking to stock up on a couple cuts of beef and you're on a really tight budget, but larger packages might be a better choice if you want to get the most bang for your buck. For the record, ABC's taste testers said it was not nearly as bad as they had expected, so if you're in a pinch, these steaks are certainly not the worst option on the market.

Some items aren't the bargain you think they are

If the concept of a dollar store has always sounded too good to be true to you, you're actually onto something — it turns out that while most items at Dollar Tree are indeed a dollar, you may actually end up paying more per unit than you would at a more mainstream retail outlet, according to a post published on the website of consumer advocate Clark Howard.

As the post explains, since the vast majority of items at the store are all valued at the same price point — it's in the name, after all — things seem pretty cheap. But certain items, like spices and condiments, are simply not a great purchase, since you can find them in larger sizes for marginally more expensive prices (or in some cases, even cheaper prices) at grocery stores and other outlets. 

For example, as Clark reports, you can get a 2.5 ounce bottle of garlic powder at the Dollar Tree for a buck, but you can also grab yourself a 5.5 ounce bottle of garlic powder for $1.19 at the supermarket chain Aldi. That's more than two times the garlic powder for far less than half the price. As a general rule of thumb, if you can find a brand name product for a dollar, it's probably a good deal — otherwise, you may just want to head on down to the nearest supermarket instead. Maybe pick up a carton of milk when you get there.

They don't pay their employees very well

Since they lead such a large and omnipresent entity in American society, it's clear that the higher-ups at Dollar Tree aren't facing too many financial hardships — in fact, CEO Gary Philbin has an estimated net worth of around $25.4 million. Surely Philbin and the others on the company's team of corporate officers won't be feeling the need to shop at the Dollar Tree anytime soon. 

On the other hand, cashiers and managers at individual stores aren't so lucky. As with most other retail jobs, the pay at the Dollar Tree is kind of low. The amount that store workers earn varies by state of course, but nationally, the average pay for cashiers at Dollar Tree is $9 an hour (this is $2 less than the average hourly pay for a cashier at Walmart), according to data from Glassdoor. As employees work their way up the ladder, they have the opportunity to make a bit more, though still not that much — on average, store managers earn a salary of $44,032 per year, again according to Glassdoor.

Numerous locations have gotten in trouble for hazardous conditions

Just take a quick walk through the aisles of your local Dollar Tree, and it'll become clear pretty fast that the company doesn't exactly place all that much emphasis on cleanliness in their stores. In 2019, Business Insider ran a story detailing just how messy one Dollar Tree in Jersey City had become; what they found included randomly assorted products haphazardly strewn across a disorganized display table to fallen products laying out in the open on the floors.

But the Jersey City Dollar Tree wasn't alone in its messiness and disorganization — and perhaps it was let off easy too. In early March 2020, the Occupational Safety and Health Administration (OSHA) fined Dollar Tree for its overwhelming health and safety violations in locations all across the East Coast. OSHA inspectors have fined the company more than half a million dollars for violations at one Massachusetts location and about $300,000 dollars for its violations at one in Pennsylvania.

The offenses were varied, and a number of them were even repeat offenses. In Pennsylvania, OSHA cited the store for having unsanitary bathroom conditions, boxes blocking exits, and having uncompressed gas cylinders, among other issues with the store's maintenance. OSHA has cited other Dollar Tree locations in Florida and Missouri for similar violations.

These days, it's a Fortune 500 Company with more than 10,000 locations

Just a couple years after the company rebranded itself as the Dollar Tree, the store went public on the NASDAQ stock exchange in 1995. As the company bought out other popular dollar stores, Dollar Tree continued to expand and accumulate wealth. However, dollar stores remained a relatively specialized industry throughout the decade and into the early 2000s.

In 2008, things changed: the Great Recession had people constantly seeking out more cost-efficient options for their basic needs. While stores like Walmart and Target provided decent options, you can't get much more cost-efficient than, well, pricing pretty much everything at one dollar.

As the New York Times reported in 2009, the Great Recession was a sort of boon for the Dollar Store industry, writing that, "while most big retail chains are closing stores and radically cutting back on new outlets, the dollar chains are planning to open hundreds of stores this year in some of the best locations to which they have ever had access."

As a result of the recession, dollar stores across the nation grew significantly, the Dollar Tree included. In 2009, Dollar Tree entered the Fortune 500 at 499 for the first time in its entire history; it's remained on that list, steadily rising in rank to 135 as of 2019. And, according to Statista, it's got more than 15,000 locations, to boot.

They acquired Family Dollar in an $8.5 billion deal

Remember how we mentioned Dollar Tree managed to expand in large part because of its ability to acquire other dollar stores and nearly monopolize the variety store industry? One of the company's largest acquisitions was Family Dollar, back in 2015. According to Inc., Dollar Tree and Dollar General both had a major bidding war over the struggling Family Dollar chain.

Although Dollar General bid higher than Dollar Tree, Family Dollar eventually sold to Dollar Tree, over antitrust concerns. While Dollar General did offer up more money for the chain, it's not like Dollar Tree's offer was particularly stingy — they spent a whopping $8.5 billion on Family Dollar. And as a result, Dollar Tree was able to increase its number of locations from around 5,000 in early 2015 to 13,000 after the deal was all done. 

Although Family Dollar is owned by Dollar Tree, most Family Dollar locations have not been converted to Dollar Trees. Unlike Dollar Tree, Family Dollar has plenty of items that cost more than a dollar — yes, Dollar Tree also breaks its dollar store mandate on occasion as well, but a bit less so than Family Dollar. Family Dollar also focuses a bit more on selling brand name items than Dollar Tree does, as Business Insider reported back in 2019.

They got in trouble for allegedly selling unsafe cosmetic products

In November 2019, the U.S. Food and Drug Administration had to send the company a warning letter for selling "potentially unsafe drugs," according to a report from CBS News. The letter revealed that Dollar Tree had been selling acne treatments that were developed in the Shanghai Weierya Daily Chemicals Factory, which the FDA had investigated before. The factory was found to use insufficient testing procedures on their products — for example, the company never actually tested to ensure that the products were free of any "objectionable microorganisms" (i.e., things like bacteria or viruses).

It gets worse though. One of the other companies supplying Dollar Tree with products, the China-based Bicooya Cosmetics, got in trouble with the FDA back in 2017 for not testing its products at all prior to selling them, as well as having rodent feces found throughout its facilities. A Dollar Tree spokesperson defended the store, telling CBS that all of the products the FDA had an issue with were topical, rather than ingestible, but added that they would be working with the FDA to ensure that the store's products met the agency's guidelines in the future.

They have been criticized for exploiting poorer Americans

Unsurprisingly, dollar stores tend to be located in regions with high populations of low-income and working class individuals. Dollar stores have become extremely prolific in some of the most low-income cities in America, like Detroit and Cleveland, the latter of which reached a whopping total of 35 dollar stores within its city limits in 2019. Progressive organizations have accused that this business model — establishing markets in low-income regions and selling items at what's a seemingly low cost — preys upon poor Americans who don't necessarily have access to healthier food items and pricier hygiene products. 

Speaking with The Progressive, Charles Bromley, who's spearheaded the movement to limit the development of dollar stores in Cleveland, said, "Their whole strategy is to go to a neighborhood that has a lot of poor people who don't have access to transportation and can only walk to and from the dollar store."

As CNN reported in 2019, dollar stores — in particular Dollar Tree and its main competition Dollar General — have been having a pretty strong couple of years financially. For the most part, they've been able to expand pretty successfully, in spite of organizers attempting to limit their growth. But that expansion comes at a cost for the small mom-and-pop shops in the low-income neighborhoods where dollar stores tend to be most prevalent, while also limiting low-income Americans access to high quality products in their vicinity.

Despite major expansions, their future is rather uncertain

As Yahoo Finance reported in March 2020, Dollar Tree and its subsidiary Family Dollar could begin struggling financially soon. That month, the company reported its financial results for the fourth quarter of 2019; the results weren't dire, but they also weren't anything to write home about. While Dollar Tree itself saw a sales increase of 1.5 percent, sales at Family Dollar fell .8 percent.

What's more worrying for the company is the fact that its sales actually saw a major dip back in 2010 and the company's been in a rut ever since, save for a slight spike in 2014. This drop likely came as a result of the 2008 recession ending — while buyers shopped there out of necessity during the recession, fewer people felt the need to shop there after the country's economic recovery. Over the last decade, Dollar Tree has undergone aggressive expansion by opening up new locations and acquiring Family Dollar, but this doesn't seem to have had much positive effect on the company's sales, according to the aforementioned Yahoo Finance article.

If we're to learn anything from the way dollar stores saw a huge spike in popularity during the 2008 recession, the oncoming coronavirus-induced recession could help the company get out of this rut. Then again, this recession will likely be quite different in character from its predecessor, thanks to social distancing standards across the nation that are keeping people out of stores in general.