Family Dollar Rejects Takeover and Reaffirms Commitment to Private Label Strategy

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March 8, 2011

While Family Dollar ‘s board of directors rejected an unsolicited bid from Trian Group this week, the retailer reaffirmed its commitment to its strategic plan, which includes ramping up store brands.

Store brands consumable products currently represent approximately 10 percent of Family Dollar sales, which the retailer said it wants to increase to between 15 and 20 percent over the next three years. To help it accomplish its store brands goal, Family Dollar has retained Marketing Management Inc. (MMI)

During a recent investor presentation, CFO Kenneth Smith said the consumable store brands goal would result in an increase in overall store brands sales from the current 19 percent to 25 percent.

MMI will help Family Dollars with a variety of private label functions, including sourcing, product development, category analytics, assortment strategy, quality assurance and customer insights.

Focusing on private label growth will enhance margins, customer loyalty and give value-conscious customer more choices of quality products at lower prices, according to Family Dollar.

The retailer said it rejected this week’s takeover bid – for between $55 and $60 a share – because it undervalued Family Dollar.

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