Private Label Penetration Rates At Family Dollar Grow
Private brand sales continue to grow at Family Dollar and the retailer is on pace to hit its penetration rate target of 20% by 2026, officials with the retailer said recently during an investor conference call.
According to Rick Dreiling, chairman and CEO of Family Dollar’s parent company Dollar Tree, Family Dollar’s private label penetration rate reached 14% in the third quarter, putting the retailer a quarter ahead of schedule.
“We’re on track to add over 70 new SKUs to our family wellness product line and more than 100 new private brand SKUs in total by the end of December,” he said. Within that same time frame, we also expect to complete our conversion of 300 control brands to private brands.”
Dollar Tree Chief Financial Officer Jeff Davis noted the continued growth of products sold under private labels is allowing the retailer to drive greater value for its customers.
“We believe that as the customer is looking for greater value, they have more options within our private brands,” he said. “It’s an opportunity for us to improve our margins. And to the extent that there is sort of price deflation, there’s an opportunity to actually provide even more value as we think about how we sort that particular product line.”
Family Dollar’s footprint also grew in the third quarter with 197 new stores opened, putting the retailer on track to hit its goal of 600 to 650 new stores in 2023.
As the company looks for opportunities to open new Family Dollar stores, it is also reviewing its store portfolio to address underperforming stores. This will involve identifying candidates for closure, re-bannering, or relocation in an effort to ensure each Family Dollar store is delivering full value.
“We need to ensure that the Family Dollar portfolio is well positioned for success and meets the financial and operating objectives of our organization and the expectations of our valued customers and associates,” he said. “We believe that this action will fortify our base, strengthen our brand, and allow Family Dollar to achieve its full growth potential.”
At Dollar Tree stores, Dreiling noted that evolution of the product assortment at stores under that banner are ahead of schedule. While not specifically highlighting private brands, he noted Dollar Tree’s Plus assortment is now available in 4,500 stores and the retailer is on target to bring that product mix to more than 4,900 locations by the end of 2023. Also, Dollar Tree frozen and refrigerated assortments are now in 6,500 stores, significantly ahead of the company’s original year-end target of 5,500.
“Customers are clearly responding to our expanded multi-price assortment as our research shows us that 17% of U.S. households have purchased a multi-price product from a Dollar Tree store at least once in the past 12 months.,” he said. “These customers are adding multi-price products on top of their traditional baskets.”
As previously reported by Store Brands, company-wide net sales in the third quarter at Dollar Tree were $7.31 billion, an increase of 5.4% when compared to the same quarter the previous year. Enterprise same-store net sales increased 3.9%, driven by a 4.7% increase in traffic, partially offset by a 0.8% decline in average ticket.
Dollar Tree same-store net sales increased 5.4%, driven by a 7.0% increase in traffic, partially offset by a 1.5% decline in average ticket. Family Dollar’s 2.0% same-store net sales increase was comprised of a 1.4% increase in traffic and a 0.7% increase in average ticket.
