This morning, Dollar Tree announced that it would acquire its rival Family Dollar for about $8.5 billion in cash and stock, merging two of the country’s biggest cheapest-of-the-cheap chains and creating the tantalizing possibility of a store called “Dollar Dollar.”
The acquisition looks like a boon for both sides: Dollar Tree buys access to a big pool of lower-income customers; Family Dollar sells its way out of its current slump at a healthy margin. Still, the acquisition underscores how the low-end retail boom — one of the major retail trends of the past half-decade — has stalled out. The recession created a lot of new customers for dollar stores to cater to. But the recovery has failed to give those customers any new dollars to spend.