I do not think Family Dollar, Dollar Tree, and other smaller brands can compete with Walmart and Amazon. To explain, Family Dollar and Dollar Tree lack the supply chain capacity to counter Amazon and Walmart.
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The retail apocalypse could destroy Ladder Capital (LADR) because of its of its focus on commercial real estate.
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Unfortunately, the reason Dollar General lacks competition in those places is that other retailers think they cannot make money in those places. In fact, Dollar General opens in places where Walmart (WMT) fears to go. Moreover, I have to wonder how many of the inflated Dollar General mortgagees are on stores in slums, or depressed small towns.
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I think Dollar Tree could collapse because many of its customers could have no money because of the Coronavirus Depression. For instance, Statista estimates 10.74 million Americans were unemployed in November 2020. That number rose from 5.81 million in November 2019 and fell from 23.08 million in April 2020.
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Dollar General has enormous numbers of new customers, including the 55 million Americans who have filed for unemployment since March 2020. Thus, Dollar General bases its success on ordinary Americans’ misery.
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Under these circumstances, it is easy to how Dollar General grew to over 15,000 stores in 44 states. A shrinking middle class and wage stagnation keep creating more customers for Dollar General (DG).
Interestingly, Mr. Market likes Dollar General’s ethically questionable business model. For instance, Dollar General Corp (NYSE: DG) shares were trading at $98.85 on 24 December 2018.
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