Discount retailer Dollar Tree is branching out in South Carolina, building a $104.4 million distribution center near Spartanburg, on the I-85 corridor between Charlotte and Atlanta and a short truck dray from the intermodal facilities of the South Carolina Inland Port in Greer.
The construction of the 1.5-million-square-foot distribution facility follows the acquisition of rival retail chain Family Dollar Stores. That deal creates opportunities for both store chains to leverage their supply chain networks and gain as much as $300 million in annual savings.
The construction of the Southeastern distribution facility also is evidence that retail shippers such as Dollar Tree continue to look for alternative routes to move containerized goods inland to U.S. consumers months after the end of a damaging labor dispute that disrupted West Coast ports.
Combined, Dollar Tree and Family Dollar imported container shipments totaling 135,100 twenty-foot-equivalent units in 2014, putting them in the No. 10 slot on the JOC Top 100 Importers ranking, following Samsung America and topping No. 11 ranked Ikea International.
Before the acquisition, Dollar Tree operated approximately 5,300 stores and 10 distribution centers and Family Dollar more than 8,100 stores and 11 distribution centers.
Dollar Tree breaks ground on the facility at the Upstate Corporate Park in both Cherokee and Spartanburg counties this month, and will begin staffing the distribution site next year. The location near the Greer inland port will give Dollar Tree “overnight access” to imported retail cargo from Charleston, South Carolina Ports Authority President and CEO Jim Newsome said.
“The port’s investment in infrastructure to support Dollar Tree operations will be returned through significant volumes over the coming years,” Newsome said in a statement July 13. Norfolk Southern Railway connects the inland port with the Port of Charleston, moving containers more than 200 miles inland for transloading and distribution throughout the Southeast.
“Dollar Tree has been extremely impressed with the South Carolina transportation infrastructure which will support the upstate distribution center,” Dollar Tree Chief Logistics Officer Stephen W. White said in a statement. “The current Interstate 85 widening project and the efficiencies associated with the Greer Inland Port were instrumental in our site selection process.”
Dollar Tree currently has more than 100 stores in South Carolina, and with the acquisition of Family Dollar now has more than 13,600 stores across the U.S. and five Canadian provinces.
The Family Dollar acquisition was completed July 6 after Dollar Tree agreed to sell 300 stores to New York City-based private equity firm Sycamore Partners. That assuaged anti-competitive concerns expressed by several states and the U.S. Federal Trade Commission.
The $8.5 billion deal created a $19 billion U.S. discount store holding company. Dollar Tree said it plans to operate and grow both retail chains separately, but the company will look for cost advantages and efficiencies to be gained through joint sourcing, procurement and distribution.
Within three years, annual “run-rate” synergies could reach $300 million a year, Dollar Tree said.
"This is a transformational opportunity for our business to offer broader, more compelling merchandise assortments, with greater values, to a wider array of customers,” Bob Sasser, Dollar Tree CEO, said last week. “We plan to leverage best practices across both organizations to deliver significant cost synergies. Combined, our growth potential is enhanced with improved opportunities to increase store productivity and to open more stores across multiple banners.”
Dollar Tree has been extending its logistics network as it expands its stores, which also include Deals and Dollar Tree Canada stores. The Company opened 93 stores, expanded or relocated 10 stores, and closed six stores during the first quarter. Retail selling square footage increased to 47.2 million square feet, a 7.1 percent increase from the 2014 first quarter.
In 2014, Dollar Tree expanded its Joliet, Illinois distribution center to 1.5 million square feet. That followed the construction of a 1 million-square-foot distribution center in Windsor, Connecticut, the prior year, as well as the expansion of a Marietta, Oklahoma, DC to 1 million square feet.
Dollar Tree has been growing steadily, increasing consolidated net sales in 2014 by 9.7 percent to $8.6 billion. The company’s net profit last year rose by $2.5 million to $599.2 million, including $28.5 million in costs related to the Family Dollar acquisition, first announced last July.