Dollar Tree to Expand Concept for Incremental Snack-Food Sales

Original Article By:  Russell Redman, Supermarket News

Chesapeake, Va.-based Dollar Tree is expanding its Snack Zone concept, which President and CEO Gary Philbin reported has drawn a strong response from shoppers.

The chain added the Snack Zone to 214 Dollar Tree stores in the first quarter, which ended May 5, and it plans to bring the concept to 750 Dollar Tree stores in fiscal 2018.

“Over the past year, the Dollar Tree merchant team has developed and tested an initiative for select stores, which we call Snack Zone. The Snack Zone is designed to provide customers with a compelling assortment of immediate consumption products at the dollar price point to drive incremental sales,” Philbin said in a call with analysts.

“Our customers are excited with the introduction of the Snack Zone — great values across categories of cold beverages, candy and snack cakes, salty treats and other favorites that bring our customers back to those treats that they crave,” he explained. “We’re excited about these incremental sales and additional foot traffic that they generate in the stores where installed.”

For the first quarter, Dollar Tree’s overall sales rose 5% to $5.55 billion. Revenue increased 8.3% to $2.78 billion at Dollar Tree stores and edged up 2% to nearly $2.77 billion and Family Dollar stores. However, same-store sales grew 4% at Dollar Tree and dipped 1.1% at Family Dollar.

“In our Dollar Tree banner for the first quarter, our top-performing categories were candy, snacks and beverage, beauty and eyewear, health and personal care and household consumables. Our sales performance was very balanced, with discretionary slightly outperforming consumables,” Philbin told analysts.

At Family Dollar, top-performing categories included refrigerated and frozen foods, school and office supplies, snacks and beverages. “Our comp performance was again driven by consumables,” said Philbin. “I’m pleased with our progress across these categories, as it speaks to the relevance and items that our customers need most and count on Family Dollar to deliver weekly.”

Consumables have been a focus in Family Dollar store remodels. The company completed 215 Family Dollar renovations in the first quarter, bringing the total to 592. Philbin said the initial results in the remodeled locations are encouraging.

“The renovated stores provide our customers with a better Family Dollar shopping experience: better shopping adjacencies and more productive, meaningful endcaps; expanded beverage and snacks, including immediate consumption coolers near checkout; added assortment of food in coolers and freezers; updated hair care assortment; expanded adult beverages in select stores; our shopper-friendly power alley to emphasize Dollar WOW! Items; and a faster checkout process for the customer,” he said in the call. “Our store teams are working hard to be the neighborhood store of choice for the fill-in shopping needs of our Family Dollar customers that typically live, work and shop near our stores.”

Overall, Dollar Tree opened 130 stores and expanded or relocated 26 stores in the first quarter. It closed out the period with 14,957 stores (6,716 Dollar Tree and 8,241 Family Dollar), up from 14,482 (6,444 Dollar Tree and 8,038 Family Dollar) a year ago.

Source:  Supermarket News

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