Family Dollar's Home Makeover
Posted on January 24, 2013 by
Family Dollar is reassessing its assortment of national home brands as it expands private-label goods.
By Barbara Thau
At Family Dollar's 7,500 stores, home has played second banana to the expansion of food and health and beauty care products in recent years--which have chipped away at sales in the category. But that's about to change.
The retailer is now working on moving home into the spotlight: It's betting on the introduction of prominently placed, cross-merchandised displays of home goods pegged to seasonal themes, along with the upgrade and expansion of its private-label assortment, to help revive the business, which accounts for a hefty 11 percent of Family Dollar's $8.5 billion in annual sales, Holly Shaskey-Platek, who was named senior vice president of merchandising in September, told HFN.
The time is ripe for a strategic shift: Family Dollar's home business has been underperforming. For the most recent quarter ended Nov. 24 2012, home sales fell 1.5% to $242.3 million.
"In 2012, we did experience a soft sales climate in home," Shaskey-Platek said.
That's because the retailer downsized the category significantly, relegating it to the back of the store as it cut back on advertising home goods to devote more floor space and marketing muscle to consumables and health and beauty care products.
But lackluster home results made it clear that the business had been given the short shrift.
"We realize that we'd taken a little too much space away from home and moved it a little too far back," Shaskey-Platek said.
The idea now is to "right size the category. With our new format, we are adding back home space where appropriate and seasonal flex space."
Telling Seasonal Stories
Shaskey-Platek sees an opportunity to capture a bigger share of discretionary dollars from its "time and wallet compressed" shoppers by whetting their appetite for home products that address their year-round seasonal needs, be it Halloween or Christmas.
The idea is to take the guesswork out of buying home products for its core shoppers, who use Family Dollar as a place to purchase "fill in" items, rather than as a destination for all their home furnishings needs, she said.
Whether Thanksgiving or Easter, "our customer will go in and buy something to spruce up their homes."
But currently, a "customer comes into the store to buy, but there's not a pulled together statement," Shaskey-Platek said.
Family Dollar merchants asked themselves: "How do we get more home [products] in the [shopping] basket? By telling more compelling seasonal stories, she said.
To that end, "as we move into fiscal 2013, you'll see us cross-merchandise across the whole store," as opposed to in silos, she said.
The changes will start to blossom in the fall of 2013. That's when shoppers can expect to see Family Dollar elevate the coordination between home and seasonal products both in colors and themes. "We will promote to themes or total categories at appropriate times during the year which will focus on breadth of home offerings and drive our strategy of total home solutions," Shaskey-Platek said.
So when home entertaining is on the upswing during the make-or-break fourth quarter selling season, for example, the retailer will feature a cross-merchandised display of everything from holiday decor and tabletop to all that's needed to prepare a holiday meal, such as bakeware and kitchen appliances.
To draw new attention to the home business, these cross-merchandised, coordinated home presentations will be spotlighted in what the retailer calls "front end seasonal displays" near the entrance of the store during specific holidays, be it Christmas, Easter or Mother's Day.
In addition, home products will get double exposure on seasonal gondolas located in the middle of the store, "where shoppers will be able to not only find their outdoor lawn and garden needs but will also be able to find their indoor spring and summer items within the home assortment, such as picnic serveware," Shaskey-Platek said.
Family Dollar will also play up key home items with store signage and in its circulars via "item of the week" promotions that capitalize on the popularity of hot products like eco-friendly tumblers, "drive footsteps in the store," and spark sales of additional home goods, she said.
Improving the home business also calls for "narrowing the breadth of our assortment and increasing the depth that we buy within an item," she said.
Private Label Push
While Family Dollar's home business has been challenging, private-label merchandise has been a bright spot in the category.
The retailer's proprietary home lines, such as Interiors By Design, Family Values and Family Chef, are the most profitable private-label merchandise at the chain, Shaskey-Platek said.
And the home department boasts the second-largest private label mix of all product categories carried by the retailer, she said, but declined to disclose sales.
To that end, private label has been targeted for expansion in home. "It's about giving our [low-income] customer better value and a better price," Shaskey-Platek said.
That will also likely mean the contraction of national brands.
"We are expanding private brands and reviewing national brands in housewares," Shaskey-Platek said.
For example, while national brands are most pronounced in Family Dollar's housewares assortment, with suppliers such as Proctor-Silex in small electrics and Libbey glassware, that's likely to change.
At the same time, private label lines such as Interiors By Design and Family Chef are ripe for a packaging and product design makeover, and maybe even a name change where it makes sense, she said.
"Why not take Family Chef and make it Family Gourmet, [the name that brands its private label food line,] so customers make the connection across the total store?"
In home, "we want to let the customer know we're in this business," Shaskey-Platek said.