Family Dollar Broadens Appeal

Family Dollar Stores is working to broaden its appeal to middle-income customers to keep sales growing once the economy recovers, R. James Kelly, president and chief operating officer, said here at the annual Global Consumer & Retail conference sponsored by Morgan Stanley. While the chain's core customers, with annual incomes under $40,000, have accounted for about 60% of the company's new

NEW YORK — Family Dollar Stores is working to broaden its appeal to middle-income customers to keep sales growing once the economy recovers, R. James Kelly, president and chief operating officer, said here at the annual Global Consumer & Retail conference sponsored by Morgan Stanley.

While the chain's core customers, with annual incomes under $40,000, have accounted for about 60% of the company's new sales growth over the last four years, middle-income customers with incomes of $40,000 to $70,000 annually have accounted for 40% of growth, Kelly said, “and we're seeing more of our new sales come from this group.

“So clearly there is some room to gain market-share growth, and our greatest opportunity is positioning our stores to better serve this [middle-income] group.”

Middle-income shoppers account for about one-third of Family Dollar's customer mix, he noted, “so there's a great opportunity for us if we can broaden our appeal to that customer, who has higher borrowing power, and convince her to buy a little more, and that's how we're trying to position ourselves.”

To do that, Family Dollar is focusing on better quality and operating standards and on offering more branded merchandise, he explained.

“Our balancing act is to appeal to the core customer that is very focused on entry-prices and value, at the same time we appeal to the middle-income customer who's also focused on value but who tends to be more interested in branded merchandise and coupons.”

Accordingly, while the stores' assortment of seasonal, apparel and home has shrunk a little bit over the last four years, most of Family Dollar's growth has come from core consumables, Kelly said, “and that will probably continue until the economy picks up a bit.”