Family Dollar Spends CapEx On New Stores, Supply Chain Developments
By Anna Rose Welch, Director, Cell & Gene Collaborative
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The company celebrates 11th distribution center, store expansions, and improvements
Family Dollar reports that its $744 million fiscal 2013 capital expenditure has helped support the company’s investments in store openings and renovations, information technology, and supply chain improvements. Supply chain and fulfillment are key areas of interest for Family Dollar, with the company spending $76 million alone on supply chain improvements. One such improvement includes the addition of Jeff Macak, a 25-year industry veteran, who was recently hired to fill the position of EVP of supply chain. The company also celebrated the opening of its 11th distribution center, located in St. George, Utah.
According to COO Michael Bloom, “St. George is an important addition to our supply chain network as it will drive transportation efficiencies through stem mile reductions to our stores out west.” This new DC, which employs 400 people, is expected to ship up to 40 million cases of goods to 800 stores in the west, once it has reached full capacity.
Similarly, the company has been working to simplify the delivery and restocking of goods in-store through the use of a new pallet delivery program. This program ensures that goods will be sorted by department, stacked, and packaged on pallets to be taken directly to the sales floor. A new surveillance system called Checkpoint will direct the tagging process to suppliers and distribution centers, enabling store employees to focus their attention more closely on customer service.
Improving The Customer Experience Through Assortment, Marketing, And A New POS
The store also hopes to keep improving profitability and sales through innovation and the addition of new products. Accord to COO Bloom, shoppers responded positively in the past few years when the store began providing new assortments of health, beauty, personal care, and food products. In order to ensure that consumers learn about new items and pricing, the retailer is looking to improve its marketing strategy using in-store communications, digital marketing, and radio. New improvements in the checkout areas will be implemented starting in January to ensure quick customer service at the POS and to increase sales of high-margin, high-impulse merchandise. CEO Howard Levine says that by the end of the fiscal year, roughly 75 percent of the chain “will reflect a much-improved shopping experience.”
Family Dollar has also allotted a significant portion of 2013’s CapEx budget to expansion. According to CFO Mary Winston, the company spent $385 million of 2013’se CapEx on new stores. The total amount spent on new stores has increased significantly from the $200 million spent in 2012. The company opened 500 new stores and relocated, renovated, or expanded 830 during this fiscal year. Additionally, the company plans to open another 525 and remodel 850 in the 2014 fiscal year. Currently, Family Dollar operates more than 8,000 stores in 46 states. Its largest competitor, Dollar General recently opened its 11,000th store, so Family Dollar still has plenty of room for expansion to catch up.
See how Family Dollar leverages in-store systems to improve profit margins.