Blurred lines between channels and better HBA options will continue to drive dollar store growth
WHAT IT MEANS AND WHY IT'S IMPORTANT — It appears that even when the economy gets back to humming on all cylinders that America’s shopping patterns will have been forever changed, and that's only going to support dollar store growth for years to come. Clearly, the two biggest competitors in Family Dollar and Dollar General are ramping up store growth all over the country, with the two companies lining up on opposite corners much the way drug chains began had done in the '80s and '90s. And dollar store assortments will continue to become better stocked with the name brands consumers are familiar with, particularly in core drug store categories like health and beauty, especially considering the two leading companies have strong drug channel pedigrees throughout the executive suite.
(THE NEWS: Deloitte: CPG companies not keeping up with explosive growth of dollar channel. For the full story, click here.)
Just last week, during an Oct. 3 conference call, former drug channel merchant and now Family Dollar president and COO Mike Bloom pointed to the expansion of health, beauty and personal care assortments by about 600 SKUs as one of the key drivers of future growth across the chain. "Our customers are really responding well to the new assortment," he said. "The biggest focus of our recent HBA expansion was in the OTC area. Our customer research indicates that our customers overindexed in 18 of the top 20 ailments affecting the U.S. population. Many of our customers do not have health insurance, so we are providing them with more solutions to take care of themselves and their families. We are encouraged by the early results in these categories, which typically take longer to ramp up."
Family Dollar's executive chairman and CEO Howard Levine added, "As we look out over the next couple years, particularly with the healthcare changes coming on, it's something that we'll pay a lot of attention to in terms of how we may be able to better service some of the markets that we're in with some additional benefits."
But it's Dollar General that may be offering the greatest branded savings to consumers, at least according to a recent Kantar survey. As compared to Walmart, Stop & Shop, Family Dollar, Aldi, Target and Walgreens, Dollar General offered an 18% overall basket savings, driven by lower opening price points in its edible and nonedible baskets and representing a substantial savings to the value shopper, which by the time the economy gets back humming again on all cylinders is likely to be the everyday shopper.