CHARLOTTE, N.C. – Discount retailer Family Dollar Stores Inc. announced plans last week to offer more grocery items and accept food stamps in an effort to become more of a “neighborhood convenience store without the convenience store prices,” reports the Charlotte Observer.
Family Dollar announced its “upcoming changes” while reporting on its fourth quarter profits and fiscal year 2006 earnings. The company noted in a press release that net income for the fourth quarter increased 32.9 percent to $38.8 million, compared to a net income of $29.2 million for the fourth quarter of fiscal 2005.
“We want to create a shopping environment that allows our customers easy access where they can park right in front of the store and get in and out, yet still enjoy a competitive pricing environment,” Family Dollar Chief Executive Howard Levine told the newspaper, adding, “Customers have fixed on that, and that niche is one we've been able to grow up.”
Levine noted in a press release that to better meet its customer’s “frequent, fill-in shopping trip needs,” the company plans to enhance its food strategy by expanding its cooler program to an additional 1,000 stores, increase its grocery selections in about 1,300 stores and accept food stamps at about 750 stores by year’s end.
According to Levine, the company has identified urban markets as a significant growth opportunity “to provide under-served customers with value and neighborhood convenience.” The company plans to increase its presence in more urban markets by implementing a new technology platform “that will facilitate better customer service and make our stores easier to manage.”
Stephanie Hoff, a retail analyst with Edward Jones, told the Charlotte Observer that while food products generally have a lower profit margin than larger ticket items such as clothing and home décor, customers purchase food more frequently and therefore visit stores more often, which in turn “gets them in the door to explore other products.”
Hoff noted that by thinking “a little out of the box as far as what dollar stores have traditionally sold,” Family Dollar is “offering products that they think will be valuable, and obviously that's been wildly successful.”