Through a special arrangement, what follows is a summary from a current article from Private Label Buyer, presented here for discussion.
By using warm, vibrant colors on its private label packaging and investing in an extensive marketing campaign, Family Dollar has managed to post big private label sales gains and provide lessons others can use.
"Family Dollar was really ahead of the curve with the color trend and other retailers such as Walmart, Target and Kmart are changing their private label packaging along the way to get closer to what Family Dollar did from the beginning," said Carol Spieckerman, president of newmarketbuilders. "They really got that one right."
Family Dollar stores typically range from 7,500 to 9,500 square feet. Just over half of its shoppers have annual household incomes under $40,000 a year and about a third are African-American or Hispanic. Its private labels include Family Gourmet, Family Pet, Kidgets, Family Chef, Interiors by Design, Outdoors by Design, Tropic Sun, Highland Outfitters and Extremely Me!, among others.
Rather than follow a tiered approach with a premium, national brand equivalent and value private label, Family Dollar has opted to dramatically increase its assortment of name brand products and complement that with a growing assortment of national brand equivalent products, said Family Dollar spokesperson Joshua Braverman.
"Family Dollar is quite bold in its compare and save promotional campaigns, going directly against name brands," said Jim Hertel, managing partner of Willard Bishop. "It communicates that it has confidence in its own label's quality and that's powerful."
While the dollar store format will see continued growth, the key for dollar stores such as Family Dollar will be to get the assortment right, added Mr. Hertel. "It needs to continue its push toward regularly-stocked staple items including consumables so as to remain relevant and competitive."
Family Dollar also needs to ensure that its private brands are competitive, not just with comparable national brands, but also with other retailers' private brands.
"Customers are going to start comparing Family Gourmet to Walmart's Great Value and Dollar General's Clover Valley and even Walgreen's Delish brand they brought in from Duane Reade, instead of just comparing them to the national brands," said Ms. Spieckerman. "Family Dollar is going to start getting hit on all sides and so its going to have to make sure it's value proposition is very clear."