Family Dollar to Focus on Store Brands Growth in 2011

SHARE:

Email

Print

LinkedIn

Facebook

Twitter

January 11, 2011

To help it accelerate private label execution and growth Family Dollar has hired a sales and marketing company with store brands expertise, the CEO said during a recent earnings call.

Acknowledging that store brands are now an important strategic pillar, Chairman and CEO Howard Levine said the company is focusing more on private label than in the past because “the growth of national brands doesn’t generally contribute to gross margin expansion,” although it improves the chains’ overall quality perception among consumers.

“Consequently, we are working aggressively to better balance sales of national brands and sales of private brands,” he said. “Our initial focus has resulted in the introduction of a few new Family Dollar brands as well as the conversion of vendor control labels. As a result, we have more control over quality standards and a greater opportunity to leverage brand value more effectively.”

In addition to expanding its Kidgets baby care line, Family Dollar plans to focus on its Family Goumet line.

“While we have made significant progress in expanding our penetration of private brands, we want to move faster,” Levine said, adding that it has hired a leading sales and marketing company “dedicated to the private brand space,” although he did not specify the company.

“Leveraging their extensive experience and resources, we intend to accelerate our efforts to expand our penetration of private brands,” Levine said. “The expansion of our assortment of private brands should lead to gross margin expansion over time. In addition, our investments to build an integrated global supply chain will support our private brand goals while also enabling us to reduce our merchandising costs.”

During the question and answer period with analysts
President and COO Jim Kelly said Family Dollar’s private brands increased 24 percent in the first fiscal quarter of 2011 “and a 30 percent increase in our private brand program in the consumable arena.”

Ken Smith, senior vice president and CFO said the company expects modest operating margin expansion for the year due to higher freight expense and the company’s focus on increasing quality.

“We expect that these pressures will offset expected benefits from the expansion of our private brand program, improvements in price optimization, and lower inventory shrinkage,” he said. “As a result, we believe that gross profit as a percentage of sales will be approximately flat for the full year.”

Read These Related Articles:

• Nutrition Claims on Store Brand Products Rise
• Meijer and Kroger Forecast Double-Digit Store Brand Growth
• Store Brands Gain Share in Significant Categories
• Supervalu Improves Baby Basics Diapers
• Campbell Soup Tempers Outlook Due to Private Label Competition

Most Read

Guest Columns

Grocery Aisle Innovation Key to Retailer and Consumer Cost Savings

Retailers are redesigning the aisle, appealing to environmentally friendly consumers and capitalizing on market trends to make their private label brands more competitive.

Source: Tetra Pak Inc.

How to Develop a Private Label Expression Aligned with Retail Brand Strategy

By creating private label as a marketing tool rather than just a price alternative, retailers gain the opportunity to tell a complete brand story while simultaneously boosting customer loyalty.

Source: CBX

Using the Store Banner to Endorse Private Label Architecture

Although the economic downturn accelerated private label growth in Europe, there was another key driver -- retailers started to brand their stores.

Source: IPLC

See All Guest Columns »

Press Releases