The rise and rise of dollar stores... and how to sell food in non-food channels
Dollar stores (Dollar General, Dollar Tree, Family Dollar etc) are small store formats that traditionally sold staples and knickknacks. Today, however, their sales of food and consumable items account for at least 20%, and up to 66%, of their volume.
In 2012, sales in dollar stores surged 9.6% to $26.3bn, while store numbers increased by 5.5% to almost 26,000 stores. Dollar General is expected to open more than 600 stores in 2013, so this trend should continue as this channel adds more stores and expands its food selection, says Willard Bishop managing partner Jim Hertel.
But many manufacturers are still struggling to cash in and find a strategy that works for them in terms of customized pack sizes, price points, private brands and products that can deliver margin and sales targets for both parties, says Hertel.
"They present something of a cultural challenge to branded food and beverage manufacturers, who are asking can we make or pack store brands? Can we meet customer needs? Can we be profitable?"