CHESAPEAKE, VA. — Food and beverages continue to play a key role in growth at several of the nation’s largest dollar store retailers.
Michael A. Witynski, president and chief executive officer of Dollar Tree Inc., Chesapeake, Va., said during an Aug. 25 conference call to discuss second-quarter financials that the retailer’s consumables business was “strong” during the period.
“Consumables, which represented 46.8% of the mix in Q2, comped at 7.9% while discretionary increased 6.7%,” Witynski said. “The last time the consumable comp exceeded discretionary was at the onset of the pandemic in Q1 of 2020. This demonstrates the success we are seeing in key traffic-driving categories where our merchants have been active in enhancing value, such as carbonated beverage, snacks and cookies and food.
“As a reminder, our reassortment consumables has been more immediate than the discretionary merchandise given the purchasing cycle, and our sales performance demonstrates that shoppers are reacting favorably to refine the value proposition. Renewed consumables momentum is a good indicator for our continued long-term health of the Dollar Tree banner.”
Witynski said Dollar Tree is continuing to refine its $3 and $5 assortment as part of its broader multi-price offering program. The retailer hopes that by testing various concepts it will be able to enhance the program. One area of success involves the freezer case, Witynski said.
“Test of multi-price frozen foods are driving exceptional sales productivity as the new offering is delivering tremendous value and meeting family portion needs such as frozen meals, pizza and ice cream,” he said.
Meanwhile, at Dollar General Corp., Goodlettsville, Tenn., executives said they saw core customers shopping more intentionally and closer to need during the second quarter. There also was an increase in trade down activity, they said.
“For example, during Q2, customers appeared to be making trade-offs of some of their food choices, contributing to an increase in private brand penetration within our consumables business,” Todd J. Vasos, CEO of Dollar General, said during an Aug. 25 conference call to discuss second-quarter financials. “We also saw growth in the number of higher-income households shopping with us, which we believe reflects more consumers choosing Dollar General as they seek value.”
Vasos said Dollar General has seen 15% to 20% increases over the past couple of quarters in canned meat, seafood, dry pasta, soups, rice and beans.
“So those core proteins, eggs, all those things that the consumer needs to feed her family but can do it at a much reduced price,” he said. “So, we’re seeing that trade down effect as well, and we’re in great position to take advantage of that, both from our everyday low retail price stance, as well as our supply chain is much more healthier there than we were last year at this time.”