Let's look at this news story first that will maybe save you having to watch this whole video. Dollar Tree, yes the same Dollar Tree that had to pay 40 million fine because its warehouse was infested with live and decaying rats nibbling the food, and the same Dollar Tree now being class actioned over selling unsafe medications, and another class action over fumbling the data of employees, yes that Dollar Tree plans to close 1000 stores over the next couple of years.

Dollar Tree also owns Family Dollar which between the two is a total of over 16,000 stores, second in size only to Dollar General with 17,200 locations. Dollar general is actually the third largest chain of any business in the USA just behind Subway and Yum Brands. What about McDonalds you ask - 13,528 locations as of February this year.

Point being, do you think that Dollar Tree with 16,000 locations and billions in sales, will be able to negotiate better pricing than your 600 sq' dollar store with rusty second hand shelves? Are you comfortable going up against these corporate giants who have enormous buying power?

So we know competition is tough as you'll be competing against these mega stores, but did you know there are actually more dollar stores in the USA than all six biggest outlet stores combined? That includes Walmart, Kroger, Costco, Home Depot, CVS, and Walgreens. A few years ago an average of 3 new dollar stores opened every single day. In case you are curious the average cost to open a dollar store is about $250,000 not including owning the real estate and will vary a lot depending on your city, size of the footprint, and amount of inventory.

Still here? OK another reason to not own a dollar store are the low margins. The average profit on dollar store products is about 35 cents. Lets do the math - it takes 200,000 sales to make just $70,000 a year. That is 547 sales a day or 46 items every hour working 12 hour days, 365 days a year. Now that $70,000 gets eaten up quickly by rent, insurance, employees, power bills, not much left over for profit. We arent even including losses to customer theft, or expired food, or employee theft.
You need huge volumes with a dollar store even just to make a livable income, and while stores that opened up ten years ago did OK it is much harder now when you have dozens of other stores around you.

If you still want to open a dollar store always check "Dispersal Restrictions" as you may not even be able to open a store in your city. Some have limits on how many Dollar Stores can open in an area. Tulsa, Kansas City, Mesquite TX, New Orleans, just a few cities that regulate the number of stores that can open.

And finally, there is a possible future in which Dollar Stores dont even exist. Look at these companies. Ben Franklin Stores, MH Fishman, Butler Brothers, W.T. Grant. Back in the day these were the dollar store equivalent called five and dimes. Everything in the stores was a nickel or a dime and these stores were everywhere. Eventually, over time, public sentiment and shopping changed, most of these stores disappeared in the 70's 80's and 90's. Something else that made five and dimes impossible? Inflation. As the value of the dollar drops, you simply can't manufacture a product at 2 cents and sell it for a nickel.

Just like the five and dime stores if the dollar keeps devaluing and a loaf of bread is $40, the dollar store model might not hold up anymore.

Now if you are still thinking about it let me give you one final reason you may want to reconsider buying a dollar store - USA relations with China. This relationship has been on shaky ground recently and may be getting shakier. Can you imagine what would happen if we lost the ability to trade with China? Or even just if inexpensive Chinese goods were hit with tariffs? You could never produce dollar store items in the USA for the prices buyers are accustomed to paying. If relations with China continue to deteriorate that could create major pricing and sourcing issues for dollar stores.

@FranchiseCityOnline