That's why Family Dollar reported 8.2% higher revenue in
the most recent quarter and 40.7% higher profit — a
period when Macy's
(M)
revenue declined 3.0% and net income fell 1.4%. The
dollar stores are in a sweet spot because they:
•Sell things people always need.
The shelves of most dollar stores are stuffed with
products consumers buy in good times or bad. When gas
prices jumped last year, the dollar stores made
themselves more of a regular draw by boosting the amount
of discounted food they sold. Industrywide, these stores
added freezer cases and coolers so they could offer milk
and frozen foods as consumers choked by higher gas
prices looked to cut back and make fewer trips.
Family Dollar, for instance, now gets 61% of its revenue
from consumables, which includes food as well as paper,
candy, snacks and pet food. Half of 99 Cents Only's
revenue comes from food, says James Ragan of Crowell
Weedon. "People will be shopping for food no matter
what," he says.
•Pick up customers and cheap inventory in tough times.
The dollar stores benefit when consumers trade down and
shop at less glitzy stores. There's a secondary benefit,
because dollar stores buy overstock and liquidated
merchandise from other retailers, Storms says.
The rising number of bankruptcies has retailers shedding
inventory, allowing discounters to get name-brand
merchandise that's being sold at fire-sale prices, she
says.
Please call (800) 567-2950 for more
information. Or Apply today! Own
your own Dollar-Up Store.
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