Dollar Tree/Family Dollar
Dollar Tree's $1.7B loss and 695 store closures trigger autophagy: selling Family Dollar for $1.05B to fund core survival.
Dollar Tree closed 695 Family Dollar stores by February 2025 and sold the bleeding brand for $1.05 billion—a textbook autophagy event where the organism digests failing tissue to fuel survival. The company lost $1.71 billion in Q4 2024, crushed between low-income customer pressure (inflation eating purchasing power) and satellite strategy cannibalization. When Dollar Tree and Dollar General both pursued the same rural markets, they competed more with each other than with Walmart, compressing margins until the weaker competitor had to retreat. This is apparent competition: two species eating different foods but occupying overlapping territories will eventually conflict over space.
The 3.0 multi-price format conversion (2,900 stores by end 2024) represents phenotypic plasticity under environmental stress: abandon the rigid $1 price point that defined the brand when input costs make it unsustainable. Shoplifting and customer price-shopping accelerated the transition—predation pressure from theft and competitive pressure from comparison shopping forced Dollar Tree to evolve or die. The format change breaks the original niche specialization, but rigidity kills faster than identity crisis. Companies that can't reallocate resources from failing divisions to viable ones die whole instead of surviving diminished.
CEO Mike Creedon called the Family Dollar sale "a major milestone in our multi-year transformation journey"—translation: we're amputating the gangrenous limb before sepsis kills the host. The real lesson is satellite strategy failure mode: penetrating underserved rural markets works until saturation, then satellites start competing with each other for the same resource base. Dollar Tree's 16,000 combined stores represented over-expansion past carrying capacity. The 106 new Dollar Tree store openings in 2024 show strategic retreat to the core brand while shuttering the problematic acquisition. This is controlled calving: deliberately shedding mass to match environmental carrying capacity before forced collapse.