Dollar stores widen appeal
Budget retailers spruce up stores, add more name brands to mix.
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:
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.
The “dollar store” moniker has been rendered outdated by inflation.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.