Family Dollar Expands Offering

ELLIOT ZWIEBACH

MATTHEWS, N.C. — Family Dollar Stores here is encouraged by the traffic its expanded offerings of groceries and health and beauty care items are generating, prompting a decision to go chainwide with the expansion over the next four years rather than limiting it to just 800 stores this year, a company executive told SN last week.

The expanded assortment is the same at all stores across the chain — basically one-size-fits-all, Rick Siliakus, general merchandise manager for food and groceries, told SN, though that could change over the next couple of years, he noted.

“Our consumer insights team is just beginning to look at clustering — running tests involving household chemicals, paper and pet foods — to see what we can learn,” he explained.

“Right now they are just kind of throwing different ideas against the wall to see how things settle down category by category in terms of ethnicity, income levels and urban versus rural locations. We haven't done that with food yet, but I think we're just a couple of years from being able to allocate all assortments based on store clusters.”

Family Dollar operates 6,880 stores across 44 states, with sales of $7.9 billion, with food and HBC sales accounting for close to 25%, or $2 billion. Stores range in size from 6,000 square feet to 12,000 square feet, with an average of 7,000 square feet.

It began adding coolers for milk, orange juice and eggs and freezers for items like ice cream and pizza in 2005. “Once we did that, we recognized a greater opportunity as food began to drive more traffic,” Siliakus said.

In mid-2010, Family Dollar decided to expand the grocery and HBC offerings to 500 SKUs, up from 300, at 800 stores it was planning to renovate this year. However, after installing the assortments at just 300 stores over the past six months, the company has decided to complete 500 more expansions by the end of its fiscal year in September and then continue expanding the assortments at new and renovated stores chainwide over the next four years, Siliakus said.

He declined to pinpoint how much space is allocated to groceries and HBC.

The space for the expanded merchandise is coming primarily from the area devoted to discretionary items he explained, though the company is also raising the height of its gondolas to 72 inches, from 60 inches previously, he explained.

All food selections — both national and private brands — consist of “very, very basic packaged goods,” Siliakus pointed out.

“What we've tried to do is become more relevant to customers looking for quick meal solutions that provide value and convenience — by offering pasta, pasta sauce, frozen garlic bread and ice cream for dinner, for example, or coffee, orange juice, cereal, pastries and toaster items for breakfast.”

Although grocery assortments include some seasonal or closeout merchandise, 85% to 90% of the merchandise is the same from week to week, Siliakus said.

Among the food items being added are the chain's new gourmet line of private brands, called Family Gourmet, which replaced the Family Pantry line it formerly offered, Siliakus said.

In the past buyers were able to add private-brand items when opportunities arose, “but now we've centralized the process and offer only private brands that are equal to or better than the national brands,” Siliakus said.

The company has added 30 Family Gourmet items over the last few months.