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. 

Dollar Tree Gaining Customer Relevance

 

Consumers are dynamic not static and companies must be as well.  In a world where consumers pay keen attention too price, value, service at retail there can be no mistake that Dollar Tree has garnered the respect from its customers. 

Consumers are evolving all the time within each brand according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®. In the case of “Dollar Tree” the company has been moving forward but not fast enough for consumers according to Johnson, who noted that Dollar Tree’s rate of growth had slowed down.  Johnson also noted that Dollar Tree continues to grow at a rate faster than most grocery store, c-stores, or chain restaurants.

So, last week Dollar Tree stated that it would accelerate ongoing efforts to expand price points through its Dollar Tree Plus! initiative. Separately, the company will begin testing higher price points on merchandise at legacy Dollar Tree stores, thus allowing them to offer an incremental mix that will drive discovery according to Johnson. 

More about ‘The Plus’! departments are helping to bring Dollar Tree additional product sizes and category variety, with expanded availability of selections in areas such as crafts, home décor, kitchen goods, toys and cleaning supplies at price points of $3 or $5.

So, Dollar Tree Plus! could well reach 500 of its Dollar Tree stores this year. The announcement this week said that 1,500 more stores are planned for fiscal 2022, and at least 5,000 are expected to open by the end of fiscal 2024.

Company officials framed the separate move to test additional price points at legacy stores—$1.25 and $1.50 were mentioned—as a means to expand assortments over time while maintaining a promise to bring shoppers a value-focused, treasure-hunt experience. There could be aisles with product for $1, $2, $3, $4, or more. Consumer understand ‘stuff’ cost more today than it did three years ago, they want discovery.  Changing the price points will drive innovation in product mix, which will drive discovery and consumer relevance.

In a battle for Share of Retail

are you Evolving Share of Stomach

Dollar Tree CEO Michael Witynski, stated, “our customers have enjoyed the ‘thrill-of-the-hunt’ for value at $1—and we remain committed to that core proposition—but many are telling us that they also want a broader product assortment when they come to shop. We believe testing additional price points above $1 for Dollar Tree product will enable us over time to expand our assortments, introduce new products and meet more of our customers’ everyday needs,”.

These recently announced moves accompany a separate initiative launched last year to open “combination” stores that leverage sister brand Family Dollar in a dual-branded store format that brings the $1 price point to rural markets previously thought too small to support a single-price point merchant, along with Family Dollar’s legacy EDLP variety. The team at Foodservice Solutions® believes that the combination stores will become a valued platform.

Let’s talk about growth. Family Dollar-Dollar Tree “Combo Stores”—primarily renovated and re-bannered Family Dollar locations—currently number 105, but officials said 400 are on the way in 2022, with the potential of as many as 3,000 over the next several years.

Did you know that Dollar Tree, operates nearly 16,000 stores across 48 states and five Canadian provinces? How fast is your company growing?

Witynski, continued, “We are a ‘test-and-learn’ organization which is what we are doing with this new initiative,” … “We listen to our customers and believe it will make shopping with us an even better experience. Our merchants have proven that they are among the best in the industry in working with suppliers to create extreme value, and we will continue to deliver the ‘thrill-of-the-hunt’ to our customers.”

Consumers are dynamic not static.  Foodservice Solutions® specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a new menu product segment and brand and menu integration strategy.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter

Food Consumers Discontent Favors Dollar Stores

 

Was your restaurant closed one day this week or last week because you could not find enough employees? Have you been raising prices, month after month to replace diminishing year over year customer counts like grocery stores? How is that working for you?  Are you employees tired, is your rent going down? 

Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® stated, “there is a growing discontent among grocery store customers and restaurant customers over reduced hours, reduced menu choice, raising prices and out of stock items elevating customer migration from both grocery stores and restaurants too the Dollar store sector.

While the restaurant sector will lose/close between 20,000 and 35,000 more units this year than they open.  Grocery stores helped by the pandemic and an increase in SNAP $ they will stay mostly steady, all the while the dollar store chains are leading the U.S. retail industry in terms of new store openings in 2021 by a large margin.

So, get this, in a new report from Coresight Research found that chains such as Dollar Tree and Dollar General will open a collective 1,626 new locations out of a total of 4,799 announced store openings in 2021 to date. Now let me say this, closing your business one day a week to give employees a day off is not a strategy.  It’s more like putting a Band-Aid on a broken leg.

Food consumers are migrating foodservice channels that are not edifying consumer relevance. Non-consumer facing ‘Band-Aids’ will not help you garner new consumers nor will it edify you with your current base of consumers.

That’s right, Dollar Tree plans to open 393 Dollar Tree stores and 198 locations under the Family Dollar brand this year, while Dollar General stated it plans to add 1,035 locations. Some of Dollar General's new stores will open under its Popshelf banner, a retail concept that features on-trend seasonal and home décor, health and beauty must-haves, home cleaning supplies, party goods, entertaining needs and more.

What are you doing for your customers today?  Invite Foodservice Solutions® to complete a Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869

Is Dollar General Making Room For more Fresh Food Fast

 

Dollar General has more than,16,705 stores they simply keep growing and according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® ‘there is a limited amount of floor space in a Doller General store for grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared food.  Fresh food has been the fuel to drive growth Dollar General need to spin off / out some other products to continue growth in food and prepared food.”  

So, Dollar General Corp. announced a new store concept it says provides “stress-free and guilt-free” shopping for non-consumable items such as seasonal and home decor, health and beauty, home cleaning supplies, party goods, and entertaining needs,”  non-food items. Makes a lot of since.

The new concept will be known as Popshelf.  The store will be a 9,000-square-foot concept will open later this month at two locations near Nashville. The Goodlettsville, Tenn.-based retailer said it intends to open 30 such stores by the end of its 2021 fiscal year.

“We are excited to introduce Popshelf from a position of strength, further highlighting our innovative spirit and building on our proven track record of store format innovation,” said Todd Vasos, Dollar General’s CEO, in a statement. “We have leveraged robust consumer insights to create a unique store that we believe will resonate with new customers, while providing Dollar General with even more opportunities for growth in the years ahead.”

Officials say the new concept arose from insights from the company’s non-consumables initiative, or NCI, which seeks to develop “treasure hunt” capabilities for its Dollar General stores behind revamped merchandising and selection of in-and-out home goods and other non-consumable essentials at price points of $5 or less, bolstering the everyday low price offering of its main selections. Launched in 2018, NCI has since brought new selections and merchandising to thousands of renovated Dollar General stores, moves the company says has contributed to sales growth and margin improvement.

Popshelf would appear to be an inside-out deployment of NCI, building a store around the non-consumables selection and bolstering that with what the company called a “highly curated” assortment from Dollar General’s concept, including nonperishable foods and beverages, paper goods, candy, snacks and its private-label selections.

The Dollar General branding does not appear to be part of the customer-facing aspect of the Popshelf store, indicating the concept could be eyeing shoppers who might not currently associate Dollar General with those items. The store also takes a decidedly upbeat approach, using a bright purple color scheme and a logo and signage signifying excitement.

The concept would also appear to reflect a more direct take on the selection of the company’s non-consumable-focused rival Dollar Tree, while presenting a discount-filtered interpretation of the treasure-hunt aspects of retailers in other channels such as Aldi or Costco, which use value on limited-time items to drive shopper excitement and store visits.

“Building on the success, learnings and insights from Dollar General’s non-consumables initiative, we are excited to unveil Popshelf following our work to research, create and define the brand and merchandising offerings,” said Emily Taylor, Dollar General’s EVP and chief merchandising officer. “At Popshelf, customers will find a differentiated retail concept that seeks to bring joy to their shopping experiences, with surprising deals in targeted non-consumable product categories. We are excited to welcome customers into these stores.”

The company said 95% of the items would be priced below $5 at Popshelf and would include items with $1, $2, $3 and $5 price points. Each store will employ approximately 15 workers. So, how many stores do you have selling fresh food that is Ready-2-Eat or Heat-N-Eat?  Fresh food Drives Sales clearly price matters?  

So, if you are wondering if Dollar General Making Room for more Fresh Food Fast the answer is yes. Are you?

Don’t over reach. Are you ready for some fresh ideations? Do your food marketing ideations look more like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the following links: Facebook,  LinkedIn, or Twitter

Grocers Worry as Dollar Stores Focus on Grocerant Food

Time starved, price conscious consumers continue migration food dollars from grocery stores to grocerant niche Ready-2-Eat and Heat-N-Eat food at Dollar Stores. Consumers are finding food discover rewarding as both Dollar General and Dollar Tree continue to expand food offering in the Ready-2-Eat and Heat-N-Eat fresh prepared food niche. 

Dollar General continues to focus on the consumer creating a platform that is more customer-friendly shopping experience, including faster checkout, and more grocerant niche food products drive incremental relevance according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Even Amazon cannot compete with Dollar Tree stores as the Dollar Store sector continue to be one step ahead of the online retailer. That step by the way according to the team at Foodservice Solutions® is the continued growth of new customers stepping into dollar stores and then returning stepping back into dollar stores.

The Dollar Store sector successfully garnered the ‘center’ of the store from legacy grocery stores over the past 15 years and now they are going after the fresh food market place. It’s a simple process as they introduce more fresh food at a lower price, they drive home the message that they can save consumers time as well.

The goal of the prototype is to emphasize perishables and help moms find quick meal solutions or fill-in items, Dollar General has expanded its cooler penetration across store bases. This was prompted by research that shows a basket with a perishable item is nearly 50-percent higher than the chain average.

Restaurants and C-stores have been building sales momentum within the Ready-2-Eat and Heat-N-Eat fresh prepared food niche. Now that both Dollar Tree and Dollar General have entered the mix the price, service, quality equilibrium will be resetting once again.  Are you prepared? Do you need outside eyes?

Are you trapped doing what you have always done and doing it the same way?  Interested in learning how Foodservice Solutions 5P’s of Food Marketing can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit:  www.FoodserviceSolutions.us for more information

Dollar Store Sector Continues Laughing at the Grocery Sector

Foodservice Solutions® Grocerant Guru®, Steven Johnson has since 1991 has been touting the success the dollar store sector has had cherry picking food products from grocery stores drive top line sales and bottom line profits.

Once again it was the Wall Street Journal (WSJ) that first reported on outstanding growing driving the success of Dollar General.  The team at Foodservice Solutions® has since 1991 reported that food, fresh food, and mix and match meal components all are contributing to the continued growth of the dollar store sector.

Dollar General’s growth consist proves that success does leave clues and with 14,000 stores.  I guess the clues are in your back yard.  Did you know that Dollar General has yielded more than double the profit of Macy’s on less revenue during its most recent fiscal year according to the WSJ. Did you know that Dollar General $22 billion market value eclipses the largest U.S. grocery chain, Kroger Co., which has five times the revenue according the WSJ?

Dollar General CEO Chief Executive Todd Vasos told the WSJ that “While many large retailers are closing locations, Dollar General executives said they planned to build thousands more stores, mostly in small communities that have otherwise shown few signs of the U.S. economic recovery.”

Why is Dollar General’s laughing at legacy grocery stores?  First they have been cherry picking CPG products from the shelf of grocery stores and selling them for less and the grocery sector has denied that they were a competitor.  Foodservice Solutions® Grocerant Guru® said “that denial is how Dollar General was able to grow to 14,000 stores. It’s the same denial that allowed grocery stores today to be out numbered 29 to 1 by restaurants in the United States. There is a battle for a larger Share of Stomach and grocery stores are simply on the track.”

Regular readers of this blog know that consumers are dynamic not static.  Food manufactures, retailers including grocery stores, convenience stores, restaurants all need to be dynamic not static as well.  We ask does your brand have customer relevance?  Who are your competitors and what are they doing better than you?  Why?  Remember the customer is dynamic are you capitulating year over year customer counts, sales, or products to your next competitor?

Are you ready for some fresh ideations? Do your food marketing tactics look more like yesterday that tomorrow?  Visit www.FoodserviceSolutions.us for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may the clue you need to propel your continued success.

Dollar General set to Take a FRESH Bite Out of Grocery Stores

When Walmart stumbles others take advantage. Last year when Walmart stumbled with their Express (C-store) format and sold 41 of the former units to Dollar General it set the stage for Dollar General to test fresh produce.  This year Dollar General is opening an additional 1,000 stores and adding fresh produce to more stores that makes it faster, cheaper, and closer to the consumer shopping experience according to CNBC.

So, we ask are Dollar stores and Convenience Stores the new food retailer of choice?  Between 2013 and 2015, Nielsen TDLinx figures show that Convenience Stores and Dollar stores accounted for 81% of the 6,588 food retailers that opened.  That leaves many legacy restaurants and grocery stores with formats that look more like yesterday’s retail than tomorrow’s retailers according to Foodservice Solutions® Grocerant Guru® Steven Johnson.

Think about this combined there were 1.4 million restaurants and grocery stores in the United States during 2015.  When you consider that 81% of the growth from 2013 to 2015 was from Dollar stores that have increasingly expanded offerings of legacy CPG food product and fresh prepared food the only conclusion one can make is food customer adoption is well underway. 

Regular readers of this blog know that restaurant sector customer counts have been flat or trending down for the past eight years.  Restaurateurs know that their customers are going somewhere.  It’s clear to the Marion Nestle that consumers are not eating less they are simply buying grocerant niche Ready-2-Eat and Heat-N-Eat food ta alternative points of distribution.  

So. just who is driving the change in consumption and purchase patterns?   That would be consumers between 25 and 34 years of age last year spent an average of $3,539 on groceries, about $1,000 less in inflation-adjusted dollars than people that age spent in 1990, federal data shows.  On average, consumers overall bought $4,015 in food for their homes last year.

Remember that 50% of Americans over the age of 18 are single and single consumers do not need to buy 18 pork chops or 6 chicken breast at any one time.  They are looking for single serve portions, a quick store visit or a quick Ready-2-Eat or Heat-N-Eat meal for one according to research conducted by Foodservice Solutions® team. 

Yes, the economy continues to play a role as more than 75 million Americans born in the 1980s and 1990s are also delaying marriage and childbearing, milestones that traditionally lead people to start making big trips to the grocery store.  Even baby boomers have cut back on grocery-store spending, federal data shows.  What is very important is the fact that new patterns or purchase are forming since 2007 there are no signs the old patterns will return.  So we ask, does your food retail brand look more like yesterday or tomorrow?

Are you trapped doing what you have always done and doing it the same way?  Interested in learning how www.FoodserviceSolutions.us can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit:  www.FoodserviceSolutions.us for more information.