family dollar

Dollar Stores Under Pressure

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In Store Brands' April cover story, Carol Spieckerman speaks extensively with editor Kathie Canning about the pressures facing the big three dollar stores.

Read the cover story online (or view the PDF).

Article by Kathie Canning, Store Brands, April 2014.

Copyright © 2014 Stagnito Media.  All rights reserved.

 

If You Can’t Beat ‘Em, Eat ‘Em: Can Retailers Become Omni-Channel Omnivores?

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Last week, the retail world was abuzz over speculation that Walmart might take a shine to Family Dollar, on the heels of Credit Suisse analyst Michael Exstein’s recommendation to that effect. His argument followed the traditional eat-to-grow logic that has long dominated the conversation in retail, as well as much of the action. Getting hot and bothered by the possibility of a bricks-based buy, however, seems downright regressive at a time when the two platforms that are influencing retailers the most, Amazon and Facebook, are bent on defanging potential digital competitors.

Facebook’s acquisition of mobile messaging start-up WhatsApp for the astronomical sum of $16 billion understandably inspired much skepticism, as well as a spate of highly-entertaining other-stuff-you-could-get-for-that-crazy-amount articles. Through the acquisition, Facebook will be able to grab business intelligence on WhatsApp’s 450 million active monthly users, including what types of phones they are using to access the service, troves of keyword insights, and data on popular features. This is good stuff for sure, but doesn’t seem to justify the cost over the short term, at least using traditional metrics -- revenues, operating margins and risk. Facebook’s real bang for the buck comes from keeping WhatsApp’s global texting treasure out of Google’s grasping paws and adding another people-connecting competitor to its platform before it gets too big for its britches, as it did through its acquisition of Instagram last year for the comparatively-palatable sum of $1 billion.

Amazon’s purchase of reader review site Goodreads last year marked a similar preemptive move, as it kept a potential competitor out of the clutches of rivals like Apple and Barnes & Noble. It was Amazon’s acquisition of Quidsi in 2010 that first got the blocking ball rolling. Quidsi’s proliferating stable of category-killing spin-offs including soap.com and diapers.com, as well as its Amazon-in-a-bottle algorithms grew to become flies that were easier for Amazon to catch than swat.

Up to this point, digital acquisitions by traditional retailers such as Kroger, Walmart, Tesco, and others have focused exclusively on scale-building and adding complementary solutions. At the same time, future competitors are lurking in the cracks and crevices, and other digital platforms are prying them open before they become threats. Will traditional retailers soon have the confidence and foresight to do the same?

photo credit: Cathy Keifer

Carol Spieckerman's Right Brain On: One-Dimensional Discourse on Dollar Stores

In her latest contribution as a Retail Wire panelist, Carol comments on what she sees as a one-dimensional discourse around dollar stores and other price-format retailers going online. It will be a game-changer (just not the way most might think).

Here's what she had to say...The conversation about price format retailers going online is far too one-dimensional. The game-changer isn't that these retailers may realize significant online sales on items they currently carry in store and with their loyalist shoppers. If those were the only possibilities, who would call it a game-changer?

The word "scale" keeps comes up in retailer press releases and investor calls for a reason. The new standard for scale isn't thousands of stores or millions of online hits -- it's both. Dollar stores may just be getting started online but they are years ahead in establishing brick and mortar scale. The former is relatively easy to ramp up by comparison. Thousands of highly-efficient, well-located small formats facilitating site-to-store pick-up for what could evolve into endless aisle assortments -- perhaps even from third party sellers? Sounds a lot like what everyone else is trying to do -- except they are a few thousand stores behind.

Read the rest of the discussion