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Dollar store growth tactics bode well for CP

A retail industry report forecasts that sales at dollar stores and other small-format value retailers will moderate over the next four years, but these retailers will expand their selections of both national brands and private-label products—presenting a growth opportunity for contract packagers.
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After enjoying a growth surge for several years sales at small-format value retailers will increase at a more modest 5.4% annual rate through 2009 forecasts Retail Forward Inc. a management consulting and market research firm specializing in retail intelligence and strategies. Sales in the small-format value retail sector rose from $31 billion to $42 billion between 2000 and 2005.

Emerging tactics at small-format value retailers include a greater use of the “treasure hunt” approach to merchandising in which products are changed frequently in order to keep consumers returning often. The channel-specific packaging formats that dollar stores and other small-format value retailers require are beyond the internal expertise staffing and production capabilities of many consumer packaged goods companies who often farm out the production of these packages to contract packagers.

The Retail Forward report forecasts that the top 10 small-format value retailers will control nearly two-thirds of the sales in the sector within four years compared with 44% in 2000. Increased private-label selections will be one tactic for increasing same-store sales by driving shopping frequency increasing transaction size and attracting new shoppers the report says.

“A wide range of opportunities are open for suppliers to share the wealth with small-format value retailers as they continue down a growth path” the report says. “To take advantage of continued geographic expansion suppliers increasingly must offer more unique channel-specific deals specially tailored national brand products and economically attractive private-label merchandise.”

For a copy of the report “Dollar Store and Other Small Format Value Retailers Industry Outlook” contact Katherine Clarke at [email protected].

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