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More bang for the buck: Family Dollar undertakes multiple initiatives in order to compete and grow in a challenging retail environment.

Article Excerpt
Executives at discounter Family Dollar Stores, Inc. have what is generally referred to as a full plate in front of them as they work to help alleviate the macroeconomic forces--rising energy and basic-needs costs without a concomitant increase in salary--arrayed against its core customers.

Among the initiatives underway at the Matthews, NC-based retailer are those designed to use expanded food assortments to generate new sales; update technology to give consumers more payment options; render the shopping experience both easier and quicker by taking full advantage of ongoing consumer research; strengthen vendor relationships; and improve manager retention.

Family Dollar operates 6,430 stores in a 44-state area ranging northwest to Idaho, northeast to Maine, southeast to Florida, and southwest to Arizona, including 21 new stores opened in August. During the last ten years, more than 4,000 new stores have been added to the chain, of which over 2,500 were added in the last five years. The merchandising concept driving the growth offers customers good values in low-cost, basic merchandise for family and home needs. Merchandise is sold at everyday low prices in a no-frills, convenient, self-service environment. Most merchandise is priced under $10.

Stores carry from 6,000 to 7,000 SKUs, a number that has remained fairly steady for a number of years. The assortment includes more than 3,500 everyday SKUs that are supplemented with so-called "treasure hunt" items, including apparel, seasonal and home products..

In its most recent reporting period, the four weeks ended September 1, 2007, Family Dollar said that net sales increased 3.4% to approximately $494.4 million, up from $478.3 million for the comparable four-week period ended September 2, 2006. Total sales increases for the four-week period were strongest in food and seasonal categories, primarily toys and lawn and garden, while sales of apparel were softer.

NEIGHBORHOOD STORE

The chain's roots go back to 1958, when Leon Levine, a 21-year-old entrepreneur with an interest in merchandising, became intrigued with the idea of operating a low-overhead, self-service retail store. Levine, who had grown up in his family's retail store, believed he could offer his customers a variety of high-quality, good-value merchandise for under $2.

In November 1959, Levine opened the first Family Dollar store in Charlotte, NC. The floor plan he designed allowed customers to shop more easily. His concept--a self-serve, cash-and-carry neighborhood discount store in low- to middle-income neighborhoods--caught on.

According to chairman and CEO Howard Levine, the son of the founder, fiscal 2007, which ended on September 1, "wasn't a stellar year for us," but must be viewed with the macro-economic challenges of the low-income consumer in mind. "I think our folks worked very hard, and while I'm proud of the results, I think we have a lot of opportunity to do...

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