NEW YORK (TheStreet) -- The battle lines between Dollar General (DG) and Dollar Tree (DLTR) to buy out Family Dollar (FDO) have been drawn. But what's going unwritten in the term sheets are the important clues being offered about the next generation of retailing.
In a proposed all-cash deal that values Family Dollar at $78.50 a share, or $9.7 billion, Dollar General has made a major play for its smaller rival. The transaction price trumps the $74.50 a share cash-and-stock deal, or $8.5 billion in total consideration, put forth by Dollar Tree on July 28 for Family Dollar. A combined Dollar General-Family Dollar would operate more than 20,000 stores compared to 13,000 for a Dollar Tree-Family Dollar tie-up.
The burning desire to merge in the dollar-store sector sheds a spotlight on the ongoing upheaval in the retail sector, which is being caused primarily by increasing mobile consumption. With more heads of household buying food and other daily staples online from Walmart (WMT) and Amazon (AMZN) due to ease of use and instant price transparency, many retailers, not just the dollar stores, are realizing they must consolidate store networks, people and supply chains to drive longer-term profitable returns for shareholders.
According to Bloomberg, year-over-year sales growth at non-store retailers, excluding fuel service stations, which captures online sales, have accelerated for five straight months, reaching a 10.1% clip in June, quicker than the 8.7% rate in May. Sales growth at non-store retailers ranged from a low point of 3.1% in June 2014 to a high water mark of 13.2% last July, and continue to outpace sales growth at traditional brick-and-mortar locations.