Private Brands, Consumables Grow At Dollar Tree
The private label product assortment at Dollar Tree continues to grow as the retailer works to expand its mix as part of an effort to meet the demands of shoppers across multiple income levels.
During the retailer’s investor conference call to discuss second quarter results, Rick Dreiling, company chairman and CEO, said there is growing evidence that consumers are seeking value through private brands. As a result, expanding and improving its private brand assortment is expected to be a “significant growth vehicle” for the company, he said.
“The private brand expansion program at Family Dollar remains on track,” Dreiling said. “This year, we launched over 125 private brand items, which we will further accelerate when our new family wellness and vitamin products hit store shelves in the fourth quarter.”
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He noted Dollar Tree is seeing “encouraging results” across its private brands, with second quarter penetration expanding by (0.55%), units sold growing by 4%, and private brand comps up more than 15%.
Additionally, Dollar Tree’s customer base continues to grow as the company has added nearly 5 million new customers across its Dollar Tree and Family Dollar segments, with 2.6 million of these customers having a household income more than $125,000. Dreiling noted research shows that a high percentage of customers at this level visit the company’s store an average of five times annually following their initial trip.
“We now rank in the top 10 retailers measured by annual new customer activations,” he said. “These positive traffic and new customer trends are leading to strong market share gains.”
The discount retailer is also seeing growth in consumables. Citing Nielsen data, Dollar Tree’s second quarter consumable unit volume growth outpaced the market by more than 11% at Dollar Tree stores and 5.3% at Family Dollar stores.
In this environment, consumers from all income levels are increasingly seeking value,” Dreiling said. “We are well positioned to capture incremental share of wallet when higher-income consumers respond to our strong price value proposition and when lower-income customers concentrate their spending on needs based consumables. This is particularly true across food and other consumables where value-oriented retailers are taking unit and dollar share. As a result, food categories are disproportionately driving sales momentum across the value retail landscape.”
The company has also expanded its Dollar Tree PLUS target to 4,900 stores by year-end, up from 4,300 stores that was articulated in June. At the end of the second quarter, the Dollar Tree PLUS assortment was available in more than 3,600 locations and the $3, $4, $5 frozen and refrigerated assortment was available in nearly 5,600 stores.