Discount chain shuts 75 locations, calls its stores ‘substandard’
Businesses rarely come out and tell you that they have a bad product, but on rare occasions, embracing the need for change and admitting problems has worked to help turn a brand around.
In 2009, for example, Domino’s shared some videos from its internal focus groups on YouTube.
“These video sessions were brutal. Consumers hated Domino’s pizza. In one video, a woman said, ‘Domino’s pizza crust to me is like cardboard.’ Another added, ‘The sauce tastes like ketchup.’ ‘Worst pizza I ever had,’ said a third,” reported Business Age.
That turned out to be the kickoff for the company’s “Pizza Turnaround” campaign, a reset for the brand, built around admitting that its core product needed work.
Dollar Tree is doing the same thing, although it’s just admitting that many of its stores are “substandard,” and planning to fix them, rather than actually running ads saying that.
In addition, the chain has committed to closing a number of locations in 2026.
Dollar Tree makes a startling admission
Domino’s acknowledging its lousy pizza worked because even bad pizza is pretty good, and even though sales had slumped before those ads ran, the company was still selling a lot of pizza.
Dollar Tree’s admission hits a little harder because its stores are its product, and it’s saying that an awful lot of them have significant room for improvement.
Scot Ciccarelli from Truist Securities addressed the issue during Dollar Tree’s first-quarter earnings call.
“So you talked about making progress on the initiatives you provided at Investor Day. I think one of the ones that really stood out was your gold store goals and how the majority of your stores basically are substandard by your own metrics. So can you help us understand the progress that you’ve already made on improving the store standards?” he asked.
More Retail:
CEO Michael Creedon answered him without pulling any punches.
“And just to correct, I think 42% is what we showed. So it wasn’t the majority were below our standards. But if the average retailer is chasing 15% to 20% of their stores, we were chasing 42% below our standard,” he said.
The chain, he added, has brought that number down.
“So that’s what I showed at Investor Day; that’s significantly high. That’s less than 1/3 today. So we haven’t broken that out. But I’ll tell you right now, that’s less than 1/3, still not where we want it to be, but significant improvement,” he added.
Dollar Tree, Creedon noted, has 9,400 stores “and change, turning these big QE2s are hard to do. I’m very pleased with the progress we’ve made over the past year.”
The process, he shared, has gotten easier.
“And as more and more stores are above our standard and approaching that grand opening look daily, the ones left to manage get easier to manage just because of volume. Every room in your house is a mess, it takes longer to clean it. As you start cleaning room to room, it gets easier to clean up the kitchen,” he said.
Dollar Tree no longer limits many of it stores to the classic $1 price point.Shutterstock
Dollar Tree made a smart call
A case study of the Domino’s campaign for the Advertising Research Foundation (ARF) showed the blueprint the pizza chain used.
“Admission is interesting. It’s humanizing. When a company admits it’s wrong, they begin to seem human, fallible, and vulnerable. Admission changes the perception of intent,” ARF shared.
It’s essentially a way to change the narrative.
“What might have seemed like a deliberate act of greed or dishonesty instead looks like a mistake or bad judgment. But most of all, admission lays the foundation for a new relationship. It’s like a reset button. Without admission of wrong, there can be no real reconciliation,” the association added.
Domino’s actually rolled out a new product along with its ads, while Dollar Tree has taken a different approach in sharing that its fixes are a work in progess.
RTM Nexus CEO Dominick Miserandino thinks Dollar Tree has played this well.
“The genius of it is very simple. Transparency doesn’t just buy you time, transparency buys you trust. When you own up to a mess, it completely changes the narrative with both your customers and your investors because you’re finally validating what they see with their own eyes,” he told TheStreet.
Dollar Tree’s task, he noted, is harder than what Domino’s had to accomplish.
“When Domino’s admitted their food tasted bad, they only had to fix a recipe and retrain some kitchen staff. Dollar Tree has to fix a sprawling physical empire of over 9,400 stores. By being brutally honest about how bad things were, they earned the trust they needed to execute,” he added.
Dollar Tree closing stores
While Dollar Tree plans to fix most of its fleet, some stores will be closed instead of remodeled.
“As previously shared, we are targeting approximately 400 gross new store openings and 75 closings. We expect gross margin to be roughly flat, driven by improved markdown performance, partially offset by higher freight costs,” Stewart Glendinning said during the fourth-quarter earnings call.
The chain has not shared a timetable for the closures, but some have already happened.
Store-tracking data from ScrapeHero shows Dollar Tree closed more than a dozen locations in March, including four in New Jersey and three in New York.
According to rates from the Zillow lender marketplace, the current 30-year fixed rate rose by 5 basis points to 6.38%, the 15-year fixed rate increased […]
NIKE, Inc. (NYSE:NKE) was among the stocks Jim Cramer discussed as he said that the Iran peace negotiations could trigger an oil glut, cool inflation, […]
