BENTONVILLE, Ark. -- Two competing but distinct retail channel players—Wal-Mart and Family Dollar—are moving closer to the convenience store product mix.
Wal-Mart Supercenters, which have full-scale grocery stores, have been offering alcoholic beverages at licensed locations nationwide since the first one opened in 1988. But the retailer's regular discount stores, which carry limited food items, have been slower to expand into alcohol. Now, for the first time, the corporation is selling alcohol at its general merchandise stores in Missouri, said The St. Louis Post-Dispatch.[image-nocss]
Experts believe the move is designed to drive up foot traffic and draw more customers away from grocery stores as the retail market slumps, the report said.
Alcohol is available at stores where liquor sales are legal, and not all discount stores have both beer and wine. The Bentonville, Ark.-based retailer said it was responding to customer demand.
"The mix of merchandise in our stores is reviewed frequently to ensure we are meeting the needs of our customers," Trent Weller, merchandise manager for Wal-Mart, told the newspaper. "Over the years, our general merchandise stores have added more and more grocery items, and we recently began adding beer and wine in areas where there is customer demand and licensing laws allow the change."
Wal-Mart's decision to add a limited selection of beer and wine at its discount stores is not necessarily about how much money Wal-Mart can make from the sale of alcohol in the short term, experts said. It's about bringing people into the stores.
"Beer turns extremely quickly. That means an awful lot of transactions. When those people come to the store, they are buying other things as well," Jim Hertel, a managing partner at Barrington, Ill.-based Willard Bishop, a consulting firm serving the retail and food service industries, told the paper. "There are other motives besides profitability."
Wal-Mart's prices were competitive with those stores, the report said, with some items priced higher and some lower. Prices on beer and wine frequently fluctuate as retailers constantly promote different items. Most of the wine at Wal-Mart is priced under $10—and some as low as $2.94—and the selection includes such widely available labels as Yellow Tail and Robert Mondavi Private Selection.
Meanwhile, the Family Dollar discount chain is trying to get shoppers to buy more of what they know they need: milk, bread and detergent, said The Charlotte Observer.
The Matthews, N.C.-based retailer reported that sales at stores open at least a year were flat in January compared to the same month last year. Family Dollar's sales have been stagnant or falling since October.
During most of 2007 and into 2008, Family Dollar's profits have suffered because its core customers—low-income shoppers—have been hit hard by rising energy costs and other expenses.
Tough economic times can sometimes help discount retailers because they gain bargain-seeking middle-income customers who typically don't shop there. In Family Dollar's case, though, those customers aren't buying enough to offset the cuts the core customers are making, Edward Jones analyst Stephanie Hoff told the paper.
As overall sales have lagged, a strategy employed four years ago is paying off, the report said. Sales of groceries and household cleaning products are soaring, preventing profits from falling any further. Family Dollar expanded grocery offerings in 2004 after customer surveys revealed people would buy milk, deli meat and eggs midweek when their primary grocery supply ran out.
"Food has been a big part of our evolution because customers spend a lot of money on food," Kiley Rawlins, vice president of investor relations and communications for the chain, told the Observer. "For some families, it takes up 10% to 15% of their budget."
Despite fierce competition from retail giant Wal-Mart, Family Dollar was also in a unique position to increase sales because its relatively small stores are located deeper in neighborhood communities. "They don't even really have to compete with Wal-Mart because Family Dollar is positioning itself in urban markets," said Hoff. "Wal-Mart isn't even in 20% of those markets."
In addition to experimenting with a new assortment of merchandise in its stores, Family Dollar is sporting a new look and slogan. Instead of "Big Brands. Little Prices," the slogan has been changed to "My Family. My Family Dollar." To reflect the family theme, the new logo features the outline of a family. The company switched to the new look in January to reflect all the changes made inside the store in recent years, Dorlisa Flur, senior vice president of strategy and business development, told the paper. The changes can be seen on the Family Dollar website and on new or remodeled stores.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.