Market Growth for Family Dollar, Dollar Tree Combo Stores
With the current state of inflation, consumers who are struggling to afford rent, utilities, and groceries are turning to dollar stores to stretch the value of their dollar. Dollar Tree Inc. (parent company to Dollar Tree and Family Dollar) is implementing several new initiatives to retain existing and new customers. These initiatives include new items, products at various prices, and new store formats, such as combo stores. Already, results are showing that these strategies are yielding more sales.
How Do Combo Stores Help?
Dollar Tree is consistently making headlines in 2022, starting with the company’s announcement related to raising its base $1 price point to $1.25 and its plan to open 400 combo stores within the year. These combo stores feature both Dollar Tree and Family Dollar’s products in one location, giving customers access to low-priced everyday items and seasonal $1 offerings. There are currently over 300 existing combo stores nationwide.
“Our combo stores are working. Customers love shopping the best of Family Dollar and Dollar Tree in one easy-to-shop local store in their community. The stores are driving a material comp sale to lift, increased productivity, higher gross margins, and improved operating performance.” – Michael Witynski, Dollar Tree Inc. President and CEO
Dollar Tree plans to continue growing by expanding the combo store format. Instead of building two properties, the company saves by housing both brands in the same size building as one store. These combo stores see increased customer visits, cart size, and profits by optimizing shopper convenience. According to Dollar Tree’s earnings report, combo stores make 20 percent more same-stores sales than standalone Family Dollar stores. In Q4 2021 alone, the company opened 174 new stores, expanded, or relocated 24 stores, and closed 65 stores.
Who Do Combo Stores Target?
Combo stores target small communities of 3,000 to 4,000 people. Dollar Tree aims to convenience customers in their immediate area so that they don’t have to travel great distances to fulfill all their shopping needs. Offering incredible value on everyday products, frozen and refrigerated food, household supplies, and more, combo stores are positioned to be a one-stop-shop for rural neighborhoods. Customers get the most out of their spending without leaving the store.
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