Food segment grows 25 percent
Zelmanovich keeps the financial specifics on
Family Dollar’s food strategy success close to
the vest, but is willing to share that “very
clear targets” were established at the outset of
both the cooler and food programs and the
company has “hit those objectives – and then
some. We’ve grown the food business in excess of
25 percent over the last three years.”
Every initiative Family Dollar undertakes “is
based on careful testing, precise ROI models and
controlled rollouts. Once we work out the kinks
in a program – whether that’s around operational
costs or assortment planning or financial
dynamics – we take the next steps,” Zelmanovich
says, noting that cross-functional teams assess
all aspects of every program. “Our best sounding
board is the store operations team,” he says.
“They have their fingers on the pulse of the
customer and watch the business unfold day in
and day out. Their input is invaluable.”
Regardless of what’s on his agenda or where he
may be in a given week, Zelmanovich insists on
spending time in the stores and welcomes the
opportunity to stand in the aisles and talk to
customers.
“The single mom shopping at Family Dollar might
not have as much cash in her wallet as someone
else, but she’s every bit as savvy,” he says.
“Our customers truly know the value of a dollar
and they’re very proficient at managing a
budget.”
Family Dollar is not the first player in the
small discount retailer channel to chase a
portion of the food business. Dollar General,
based in Goodlettsville, Tenn., has been in the
food business for several years and launched the
grocery-friendly “Market” concept in 2003.
Still, analysts insist there’s room for Family
Dollar to capture a share of the food dollar.
“Dollar General operates a large number of
stores in rural markets, with a concentration of
stores in the South,” Adler says. Family Dollar
“has about 25 percent of its units in urban
areas and operates stores in 44 states.
“What’s interesting about Family Dollar is its
focus on urban shoppers — many of whom don’t
drive and so rely on a local store for
convenient fill-in trips. We have a bi-modal
economy and the bottom tier is growing faster
than many acknowledge.”
POS technology upgrade
The rollout of upgraded POS technology currently
in progress will allow the company to accept EBT
and food stamps, so Family Dollar will be “in a
stronger position to attract low-income shoppers
and potentially lift sales,” Adler says.
Zelmanovich points out that Family Dollar is not
replacing the traditional trip to the grocery
store. “We offer our customers a viable fill-in
trip option regardless of format,” he says.
Weinswig says Family Dollar “competes with a
variety of retailers, including convenience
stores, food retailers, drug stores and
discounters. Based on the dollar stores’ limited
consumables assortment, they serve the purpose
of fill-in trips rather than stock-up trips.”
Rising gas prices “could lead shoppers to stock
up once a month at the discounters/warehouse
clubs, and then make more frequent fill-in trips
in between at the dollar stores for basics such
as milk and eggs,” she says. “To that end,
Family Dollar could be taking some share from
Wal-Mart.”
Price is a key point of leverage for Family
Dollar as it takes on convenience store
challengers in the battle for the quick-trip
food dollar. It has considerable buying power,
which brings with it the ability to deliver
competitive pricing.
“We’re about helping the consumer to stretch the
family dollar,” Zelmanovich says. “With strong
vendor partnerships, supply chain efficiencies,
convenient locations and a large number of
stores, Family Dollar is well-positioned for
future growth.”
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