The family dollar reduces buyers' prices to save themselves

The reduction chain is struggling to follow other stores to a dollar for several years.

The family dollar is one of the largest Dollars store channels In the United States, but it is not the most successful. Subsidiary of Dollar Tree, Family Dollar has around 8,000 stores nationally and is in direct competition with the constantly expanding Dollar General, by CNN company. Due to its often higher prices in stores, the reduction chain is struggling to follow its rivals. Now, the executive takes the initiative and modifies this pricing model, while simultaneously reorganizing stores in difficulty. Read the rest to discover how Family Dollar reduces prices to save themselves.

Read this then: The family dollar and another reduction chain are closing stores .

Dollars stores have not become more popular.

snack zone at Dollar Tree store
Zikg / Shutterstock

Inflation afflicts all sectors of the economy, which pushes consumers to withdraw discretionary expenses and to seek retailers who will not be overloaded for necessities.

According The New York Times , dollars stores Understand this trend This is why they have a business model designed to withstand all storms. These stores are located in small or rural areas, where they can offer prices lower than those surrounding the retailers nearby - while enjoying when the money is tight.

"The consumer tries to reach both ends, and when you have limited funds in your portfolio, dollars stores offer the possibility of doing so," Joseph Feldman , a main analyst of Telsey Advisory Group, said The New York Times in August.

Illustrating this, during a recent call for results, Dollar General Exaches said that stores have been successful via a new set of customers, with annual income totaling Almost $ 100,000 . As for Dollar Tree, the company has exceeded Wall Street expectations In the third quarter, according to the Associated Press.

Family Dollar is part of the success of Dollar Tree, but according to a recent profit call, the company prefers to watch Dollar Tree and Family Dollar as " Really two growing companies "This benefits from different strategies.

The family dollar has historically experienced higher prices than competitors.

woman looking at prices while shopping
Zigic Drazen / Shutterstock

While the price of Dollar Tree is quite consistent with $ 1.25, was useful at the end of 2021 from its $ 1 standard - General Dolar and the family dollar sell items between $ 1 and $ 10, reports CNN Business. But in this low range, Family Dollar prices are generally 10 to 15% higher than those found at Dollar General, as well as other stores at reduced prices. This difference has harmed Family Dollar's profitability because consumers are likely to go elsewhere if they know that they can find a better price.

But Rick Dreiling , Executive President of Dollar Tree Inc., said that Family Dollar now had lower prices "on parity" or equivalent to competitors. The announcement occurred during a call for results on November 22, with Mike Witynski , president and chief executive officer of Dollar Tree, Inc., confirming that "from a price point of view, [Family Dollar] is in the best position in more than a decade".

The announcement of the price drop was first for a August 25 calling , when Witynski said prices would be reduced to Family Dollar to allow more "competitive prices" that "would improve our sales and profitability productivity, and ultimately our opportunity to accelerate store growth".

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The strategy already works.

printing receipt at cash register
Simon Kadula / Shutterstock

Managers have not been clear about the exact price changes, but analysts say that they have dropped by around 5% on average since the August announcement, according to CNN activities. A spokesperson Dollar Tree Inc. also noted that prices can vary depending on the product, but nevertheless, the strategy has apparently been effective. AE0FCC31AE342FD3A1346EBB1F342FCB

"Customers recognize this commitment to value, which contributed to an increase in sales by 4% and the increase in quarterly traffic in the segment in three years," said Dreiling during the November 22 call.

Michael Montani , Detail analyst at Evercore ISI, said that price reductions are "a logical decision". What will be really important is where the company goes from here and if "they rely on this momentum," he told CNN Business.

Witynski declared on the call of profits that the company is in fact "determined to maintain its competitiveness", which will imply more than price reductions.

More changes are on the agenda of the family dollar.

sign for family dollar

Beyond the prices, the leaders plan to revise the stores to a family dollar, which need a makeover. CNN points to problems in stores such as size and lack of staff, but a Food and Drug Administration (FDA) survey of the United States has also led to a distribution center in Arkansas close Earlier this year. According to an inspection report, the installation - which has sent products to the locations of the family dollar - had dangerous and unsanitary conditions, namely a major infestation of rodents, according to the hill.

Dollar wooden executives are apparently aware of these problems and want to get stores, product offers and the name of the family dollar in SNUFF.

"The teams focus on improving store standards. They are determined to clean them, straighten them and fill them," said Dreiling. "Improvement of sales productivity is an essential element in the recovery of the family dollar, and we focus extremely on the driving of sales by square foot, unit sales growth and the growth in the number of transactions."

Categories: Smarter Living
Tags: News / / Shopping
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