Photo: Flickr / Vlastula
Brick and mortar stores are turning to food and other strategies to fight online competition. And to a certain extent it is working.Dollar General is already seeing gains from such changes, according to Deutsche Bank’s Charles Grom:
(1) Phase 5 Program (core of category management focus) improves assortments by store/region based on area demographics/prior sales patterns; (2) both new concepts, DG Market (SPSF $327 vs. avg. $212) and DG Plus (Sales lift +20% on remodels/+45% on relos vs. DG Avg. of +4%/+20% on normal remodels) have shown impressive sales gains; (3) numerous in-store initiatives benefiting avg. basket size including: increased perishable sales (driven by cooler expansions) increase avg. basket ($10.89) by ~$6; beer/wine (3,700 stores, 5,000 @ YE) increases avg. basket by $9; & Value Valley’s focus on more $1 items (26% of mix) improves avg. basket by 3% (currently in 5,700 stores w/ 900 being added in 2012).
Deutsche Bank rates the company a “buy.”