By George Anderson
Family Dollar Stores said it is pleased with the progress it has made in reducing shrink (and building profits) in its urban stores and finding overseas manufacturers to source its "treasure hunt assortment" of items that help drive consumer traffic into its stores.
The nation's second largest dollar store chain based on sales said it introduced its "urban initiative" program last year with the intention of reducing staff turnover and cutting into losses caused by product shrinkage.
According to The Wall Street Journal, Family Dollar's initiative included adding more district-level managers to keep a closer eye on stores; securing frequently stolen goods in locked display cases; and more effective pre-employment screening.
Chairman and Chief Executive Howard Levine said the changes the company has made, including the installation of a loss-prevention system that identifies signs of theft such as a large number of product returns, has worked.
"Year to date, approximately 80 percent of the urban-initiative markets are more profitable compared to last year," he said. "And, more importantly, two thirds of these markets are achieving higher profit margins."
Family Dollar is also looking to take advantage of overseas sourcing to improve store sales and keep costs under control. The result, the company hopes, will be an improved bottom line.
Mr. Levine told analysts at the Lehman Brothers Ninth Annual Retail Seminar that the company now sources about 30 percent of the goods sold in its stores from suppliers in other countries.
The company, he said, was pleased with results for last holiday season where the company took advantage of opportunities such as product closeouts to deliver value to its price-conscious consumers.
"While we’ve developed a lot of expertise and experiences overseas," he said, "we still think we have a lot more coming to us to get more fully developed in the whole global procurement area."
Moderator's Comment: What lessons are there for dollar stores and retailers in other channels from what Family Dollar is doing with its business? Where do you see the greatest opportunity for the retailer to improve its top and bottom line performance? - George Anderson - Moderator