For decades, retail chains like Dollar Tree and Dollar General have maintained a reputation for offering consumer goods and services at cheaper prices than their competitors. However, with fierce competition between bargain stores, and Americans with even less money to spend thanks to continued high inflation, these companies are no longer immune. Dollar Tree recently announced it’s cutting its financial outlook for the remainder of the year, as evidence of its loyal bargain shopper consumer base taking their business elsewhere, affecting the overall year in sales. 

Bargain stores have long since been retail chains that capitalize on entrenched poverty in regions across the U.S., as well as “a shrinking middle class and rival retailers’ store closures.” A fatal mistake from Dollar General and Dollar Tree investors was assuming that these storefronts would be “protected from broader economic challenges because customers flock there to save money when times are tough.” This mistake resulted in investors driving the companies’ stock up. With the latest August inflation and jobs report from the Bureau of Labor, the unemployment rate is currently at 4.3%  and the August inflation rate was reported at 2.5%, forcing many Americans to cut back on their spending and alter their shopping habits. 

Earlier this month, Dollar Tree shares plunged 20% shortly after the company announced that it had cut its outlook for the remainder of the year, citing immense pressure on the low and middle-income customer base. Dollar General also experienced drastic stock slumps, as they too cut back on their full-year forecast, resulting in one of their worst days on record in early September. 

Competition from Walmart and other large retailers has hurt stores like Dollar General and Dollar Tree, due to low-income customers being unable to afford necessities and dialing back on their spending. The COO of Dollar Tree had similar concerns saying that “inflation, interest rates and other macro pressures have a more pronounced impact on the buying behavior.” 

Large retail companies like Walmart and Target have lowered their prices trying to draw shoppers to their storefronts. Dollar General’s CEO notices the appeal for shoppers who are drawn to other retail chains in search of low prices. Previously, in economic downturns, middle-income households were drawn to Dollar General to save more, but recently their spending has increased at Walmart. A former top executive at Dollar General points out that “when Walmart is doing well, Dollar General struggles.”

The CEO of Dollar General stated, “Inflation has continued to negatively impact these households, with more than 60% claiming they have had to sacrifice on purchasing basic necessities due to the higher cost of those items.” Due to the increase in rent prices, utilities, and health care costs, customers are restraining themselves from buying essential items. 

Many Americans have also had to make drastic cuts in their food and grocery budgets, facing soaring energy prices. In July, the Consumer Price Index determined that energy prices increased by 4.3% since June of 2023. Americans are paying well above the national average of $135 a month in utilities, with some states’ average electric bills over $200. This has put strains on their monthly budgets with some asking, “Do I pay all the rent or buy food or not let my son do a sport?” American households that spend more than 6% of their income on energy bills are considered energy poor which can result in increased exposure to heat or cold. On a national scale, about 16% of American households suffer from energy poverty—often prompted by out-of-date heating systems and older buildings. 

Some households are uniquely affected. As IWF’s Center for Economic Opportunity Director Patrice Onwuka testified recently during a congressional hearing on energy prices:


Poor and working-class families spend disproportionately more of their incomes on essential items such as food and energy than higher-income households. Yet, these households are least likely to be able to meet basic household heating, cooling, and other energy needs.

According to Census survey data, over a third (37%) of households nationwide reported difficulty paying for usual household expenses in July 2024. Some 44% of households living near or below the federal poverty line experience challenges financially meeting their energy needs. 

What can policymakers do to relieve the pressure on household finances? Onwuka explained that deregulation is needed:

Policymakers should undo the regulatory burdens implemented over the past few years by rescinding pending regulations and reversing those enacted to ease households’ and businesses’ hardships. 

Policymakers should also repeal regulations that needlessly restrict energy production, supply, and innovation. 

Finally, clawback unspent funding from ARPA and the IRA to defund the spending agendas that fuel inflation.

At every turn, American households are under immense pressure from the energy market, and soaring prices for basic necessities. American consumers should never have to worry about choosing between running their AC or purchasing basic household necessities.