NEW YORK (TheStreet) -- When Dollar Tree (DLTR - Get Report) announced it would buy Family Dollar (FDO), many analysts leaped to the conclusion this represented consolidation in the dollar-store space, perhaps even a new challenge to Walmart (WMT - Get Report)
Here is the entrance to a Dollar Tree. It is in a strip mall next to a traditional grocery store and complements it.
The aisles are piled high with merchandise, each item carrying the same price, $1. Shoppers go here for bargains, then go to the grocery to fill their lists. Or they come in and make impulse purchases of relatively durable goods, like kitchen tools, candy, and toys for young children.
This is a Family Dollar. It stands in a strip mall by itself, far from any grocery. For poor or aged consumers, it may be the only store they use most days.
A Family Dollar features name-brand goods in sizes that can be carried. Clothes are being phased out in favor of grocery items.
This is a Dollar General store. It serves similar customers to Family Dollar and looks similar. But looks are deceiving.
Here is a key difference. Merchandise selection at Dollar General is customized to each store. You won't find pork rinds at every Dollar General, but where you do there are bound to be people nearby who like them.
At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.