Family Dollar to Invest Up to $104 Million on Store and IT Refresh in 2011

Discount retailing giant Family Dollar is beginning to reap the benefits of a multi-year technology upgrade; in fiscal 2010, which ended August 28, 2010, the company saw top-line sales growth of 6.3% and same-store sales increases of 4.8%. Aiming to continue the positive momentum, the 6,700-store retailer plans to open 300 new stores during fiscal 2011, a 50% increase over its 2010 openings. In addition, Family Dollar plans to renovate 600 to 800 existing locations, investing $100,000 to $130,000 per store to do so.

"We are launching a comprehensive renovation program that will result in more customer focused assortments and layouts, rejuvenated physical stores, and more customer-centric teams," said Family Dollar chairman and CEO Howard Levine during a conference call discussing the retailer's 2010 financial results. He added that the renovations began in a number of stores in August, and that Family Dollar plans to have the first 200 renovations completed before the holiday season begins.

The faster pace of store openings and the aggressive renovation schedule are a shift from Family Dollar's strategy of the past few years, when it slowed new store growth to focus on improving returns from existing stores. During this time, the retailer invested in several key technology initiatives including:
• A complete end-to-end reengineering of its merchandising and supply chain processes with Project Accelerate;
• Enhancing the performance of its store teams and refreshing its store technology platform chainwide with its Store of the Future program;
• Creating a more convenient, easier-to-shop store layout with Concept Renewal.

The combined result was "an acceleration in comp sales from the 2% to 3% range in the first half of fiscal 2010 to the 6% to 7% range in the second half of the year," said Levine. "Importantly, many of these investments are expected to continue driving results in fiscal 2011."

The renovations will improve Family Dollar's merchandising and store operations. "Utilizing a race track flow, we have created a store-within-a-store presentation, with more customer friendly adjacencies and improved navigational signage," said Levine. "With the goal of enhancing customer sightlines, while also increasing merchandising capacity, we are utilizing new fixtures that are designed to simplify restocking and recovery, while also providing greater flexibility for future merchandising shifts.

"We have further expanded our assortment in key consumable categories, like food and health aids, while also strengthening our seasonal presentations," Levine added. "Finally, we have adjusted our check out to encourage more customer interaction while also supporting our shrink control efforts."

Noting that customer satisfaction is dependent on shoppers' interaction with its employees, the company is leveraging its upgraded store technology platform to expand its employee training and invest in new workflow management tools. The renovations will also include exterior redesigns to help strengthen Family Dollar's brand identity.

For related content see:
Family Dollar Unveils Technology Refresh Plans
Family Dollar Completes Tech Refresh Initiatives, POS Roll-Out
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