Recently, Standard & Poor’s upgraded Family Dollar Stores from “Buy” to “Strong Buy.” S&P explained their favorable rating saying, “We look for Family Dollar Stores, Inc. to benefit from cost-conscious consumers trading down from higher-priced retailers for everyday necessities.”
I think they’re on to something. The economy doesn’t appear to be improving anytime soon and could get worse before it gets better. In the meantime discount retail stores like Family Dollar and Dollar General can reap the benefits of shifting consumer focus. It’s their time to shine and Dollar General is already ahead of the curve. Over the past five years, Dollar General has more than tripled their marketing budget from $5.4MM in 2003 to $45MM in 2006. They pulled back a little in 2007, spending only $40.5MM. But as David Aaker put it, author of The New CMO Imperative, it’s not important how much you spend on marketing as it is where you spend.
Signage is valuable to help engage existing customers; however the greatest opportunity for Dollar General in this economy is overcoming the “pride factor.” Dollar General and stores like it should take this opportunity to invest their marketing dollars in interior design, visual communication, and aggressive shopper marketing. Make the stores and the shopping experience more appealing. Now is the time to snag shoppers who don’t typically consider Dollar General for regular purchases, but are forced to reduce their grocery budget.
In the video below, a bargain-focused shopper makes the best case for Dollar General to expand their target demographic and snatch market share from low-priced stores where prices just aren’t low enough.
