Dollar Tree’s Growth and Success Now Focused on Grocerant Food and Beverage

 

With 63.2 percent of all households now consisting of one or two people, Doller Tree’s focus on grocerant niche meals and meal components for them is unlocking the potential legacy grocery stores failed to address according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Doller Tree raised its financial outlook for the year, saying efforts to drive sales of consumables and focus on value are over keys to success moving forward.  A renewed focus on food and drink propelled Dollar Tree to a strong third quarter as consumers increasingly turn to extreme discounters amid soaring inflation, the retailer announced last week.

One again same-store sales across the business climbed, 6.5% for the period ended Oct. 29, reflecting an 8.6% increase at Dollar Tree and a 4.1% bump at the Family Dollar banner. The consumer top of mind discounter reported its operating income increased 22.8%, to $381.3 million, while margins improved 70 basis points to 5.5%.

So, for the nine months ended Oct. 30, Dollar Tree’s same-store sales rose 9.2%, largely driven by a double-digit increase in average ticket that was offset by a traffic slowdown.

The solid Q3 performance prompted Dollar Tree to boost its sales outlook for the year, with consolidated net sales for 2022 now expected to range from $28.14 billion to $28.28 billion, up from the previous range of $27.85 billion to $28.10 billion. Dollar Tree said it expects to report mid-single-digit same-store sales growth for the year, with Dollar Tree performing better than Family Dollar.

It was an emphasis on food and beverage sales drove Dollar Tree’s results during the quarter, CEO Mike Witynski said in a statement.

Witynski continued, “The efforts to evolve the assortment to drive consumables performance at Dollar Tree, combined with initiatives designed to improve the value proposition at Family Dollar, are working,”. “We believe we will continue to be part of the solution to millions of households seeking value at a time when they need us most.”

Here is more evidence many legacy grocery stores are missing out, earlier this month, West Coast discounter Grocery Outlet reported same-store sales growth of 15.4% during the third quarter, driven by inflation-pressed shoppers.

On a side note, this month marks one year since Dollar Tree raised most of its prices from $1 to $1.25 to boost its margins during a time of skyrocketing freight costs, supply chain disruptions and inflationary pressures.

Success does leave clues. One clue that time and time again continues to resurface is “the consumer is dynamic not static”.  Regular readers of this blog know that is the common refrain of Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.  Our Grocerant Guru® can help your company edify your brand with relevance.  Call 253-759-7869 for more information.