What: the retailer wants to expand its new concept store combining Dollar Tree and Family Dollar

Why is it important: the format targets rural communities of 3 000 to 4 000 people

Dollar Tree plans a major expansion for a new concept store, introduced a little over a year ago, that combines its namesake and Family Dollar banners into a single storefront. The format targets rural communities of 3 000 to 4 000 people, where the retailer would traditionally not open a Dollar Tree store alone.

The retailer now operates a total of 50 “combined” stores and comparable sales are up 20% on average at the new format stores.

Family Dollar's sales often have lagged Dollar Tree's, and the company has closed hundreds of Family Dollar stores. That trajectory, however, reversed during the pandemic, when Family Dollar's offering of food and household essentials helped feed sales as consumers stocked up their houses and consolidated trips.

The format also combines the differing assortments of the two banners, bringing food and household essentials from Family Dollar together with crafts, party supplies, decor and other categories from Dollar Tree.

Dollar Tree already operates nearly 15 700 stores across its two banners. In the previous fiscal year, which wrapped up at the end of January, both the Family Dollar and Dollar Tree banner posted top-line sales growth amid a retail environment defined in nearly every aspect by the COVID-19 pandemic. That growth continued into the fourth quarter for both banners, with Family Dollar same-store sales up 8.1% and Dollar Tree's up 2.4%.

Dollar Tree eyes at least 3 000 locations for rural concept stores