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Richard J. George, Ph.D.

Professor of Food Marketing
Haub School of Business, Saint Joseph's University

Should Walmart acquire Family Dollar?

February 20, 2014

FROM RETAILWIRE:
If you've ever tuned into sports talk radio, you know that there are always fans who suggest trading away players to pick up a favorite from another organization. The latest deal du jour is the suggestion by a Credit Suisse analyst that Walmart acquire Family Dollar. Do you think a Walmart acquisition of Family Dollar would be a good business move?      [more...]

MY COMMENTARY:

While Walmart has traditionally built versus bought in the US, such an acquisition could make sense for Walmart. Walmart's new CEO, Doug McMillin, is pursuing a small store format initiative and dollar stores represent a viable alternative.

Dollar stores today offer over 60% consumables and have come a long way from their dodgy variety store days. In fact, dollar stores have been known to be the best survivors of the "scorched earth syndrome" often associated with the opening of a new Walmart Supercenter. Management at Walmart has been known to refer to dollar stores as "ankle biters." Pesky competitors that are difficult to defend against let alone kill.

Such an acquisition, assuming Walmart can avoid the disastrous culture clash it experienced in Germany, would not only take out a serious ankle biter but also position it better to ward off the other extreme value retailers.

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