CHARLOTTE, N.C. -- Family Dollar Stores Inc. plans to offer more groceries in its stores and begin accepting food stamps, a move aimed at making the North Carolina-based discount chain a lower-priced competitor to convenience stores, said the Associated Press.
While food generally has low profit margins compared with products such as apparel and house decorations, people buy food more often and it brings them into the stores to explore other products, Edward Jones retail analyst Stephanie Hoff said.
What they're doing is to think [image-nocss] a little out of the box as far as what dollar stores have traditionally sold, said Hoff. They're offering products that they think will be valuable, and obviously that's been wildly successful.
Family Dollar, based in Matthews, N.C., has 6,100 stores in 44 states and is working to set itself apart from big-box stores like Wal-Mart, which also competes for low-income consumers. A way to do that is to choose convenient neighborhood locations, said Howard Levine, Family Dollar's CEO.
We want to create a shopping environment that allows our customers easy access where they can park right in front of the store and get in and out, yet still enjoy a competitive pricing environment, he said.
The move to add more groceries has been two years in the making, and includes adding coolers to stores to house refrigerated foods. The company also plans to increase its clothing assortment and experiment with new store layouts.
The addition of food stamps should further boost food sales because many of the company's customers can afford to buy groceries only by using food cards, Family Dollar spokeperson Kiley Rawlins said. By not accepting food stamps, that's a whole transaction we've been missing, she said.
The news comes on the heels of the company posting a better-than-expected 33% jump in quarterly profit last week. Net income rose to $38.8 million, or 26 cents per share, in the fiscal fourth quarter that ended August 26, from $29.2 million, or 18 cents per share, in the year-ago period. Sales rose 10.3% to almost $1.6 billion. Family Dollar shares were up 31 cents, or 1.09%, to $28.82 in early trading Friday on the New York Stock Exchange.
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