Dol­lar stores widen ap­peal

Bud­get re­tail­ers spruce up stores, add more name brands to mix.

Austin American-Statesman - - BUSINESS -

Duck­ing into a dol­lar store to pick up a soda and bag of cook­ies might save you time, but will you save any money?

Since the start of the down­turn, ma­jor chains such as Dol­lar Gen­eral Corp. and Fam­ily Dol­lar Stores Inc. have ac­cel­er­ated their growth by trans­form­ing into stores with wider aisles, bet­ter light­ing and more name brands.

Although prices tend to be cheaper than drug­stores and su­per­mar­kets, for ex­am­ple, dol­lar stores are still usu­ally slightly more ex­pen­sive than Tar­get Corp. or Wal-Mart Stores Inc., said Dutch Fox, an an­a­lyst for FBR Cap­i­tal Mar­kets & Co.

Here’s what to ex­pect from dol­lar stores to­day:

Se­lec­tion

Even though they’re re­vamp­ing their lay­outs to be more invit­ing, dol­lar stores re­main de­fined by their lim­ited se­lec­tions. That’s pri­mar­ily be­cause they’re much smaller than the typ­i­cal su­per­mar­ket at 7,500 square feet.

Dol­lar stores fo­cus on of­fer­ing a hand­ful of big-name prod­ucts with the widest ap­peal. In­stead of of­fer­ing 20 types of ketchup brands and sizes, for ex­am­ple, there might only be five, said Jim Smits, head of con­sum­ables at Dol­lar Gen­eral.

Those se­lect op­tions are get­ting more at­trac­tive, how­ever. Dol­lar stores are rais­ing their pro­file by stock­ing up on more gro­ceries and name brands.

Prices

The “dol­lar store” moniker has been ren­dered out­dated by in­fla­tion. Dol­lar Gen­eral and Fam­ily Dol­lar say about a quar­ter of their prod­ucts still cost just a buck.

The trick is to pay at­ten­tion to the package size. Pat Con­roy of Deloitte’s con­sumer prod­ucts di­vi­sion, said dol­lar stores work with sup­pli­ers to of­fer name-brand prod­ucts in smaller pack­ages.

At a Fam­ily Dol­lar in New York, a bot­tle of Coca-Cola and a box of Cap’n Crunch ce­real both cost $1. The 14-ounce Coke was smaller than the nor­mal 20-ounce bot­tle; the tiny ce­real box held only four serv­ings.

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