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  • Cecile Corral

Family Dollar Thrives on Promotions, Private Label

As its shoppers' habits shift with the economy, Family Dollar is actively altering its product mix to focus more on consumables and less on discretionary items.

During the company's presentation at Deutsche Bank's Small and Mid Cap Conference this month, Family Dollar chairman and ceo Howard Levine said the 6,600-plus unit neighborhood discount chain is "working to increase our relevancy to the customer" by reinforcing its more promotionally priced offerings and expanding its assortment of "key consumables," such as food.

Family Dollar's customers — typically women in their 40s who have established families and live on less than $30,000 annually — since last year have been increasingly "looking for great value on the basic items they use everyday...[and] they've been more sensitive to promotional events and have often traded down to private label and less expensive items," he continued.

Family Dollar's recent related efforts have paid off. Selectively investing "while constraining overall purchases in more discretionary categories" has resulted in better returns on inventory investment and increased profitability, Levine explained.

New strategies include the revamping of Family Dollar's point-of-sale technologies for quicker check-out customer service as well as the addition of food stamp and credit card payment options at many of its stores.

To increase store traffic, Family Dollar is also "leveraging the synergies" between its coolers, food and food stamps, he said.

Levine said that while the current economic conditions have worked in Family Dollar's favor, the retailer "prefers good times" over recessionary periods. "Often people come to me and say, 'Boy, you must be real happy that the economy is in the toilet and things are awful out there.' But that is not the case at all," he said. "We prefer good times, strong employment and full employment. We feel we are nicely positioned to compete not only in tough times when people really need us."

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