How much of a threat is WMT, Aldi and Temu to the dollar channel? Are delivery and pick-up options that they’ve rolled out stealing customers from dollar? Or are these services targeted towards existing WMT customers (meaning that WMT offers pickup isn’t a traffic draw from dollar to WMT as the dollar customer doesn’t care about delivery and pick up)
I agree with that. If you look at wallet share, dollar customers spend a majority of their retail wallet at WMT. Management uses the talk track that customers will i) shop at WMT on weekends when they have more time (parking is farther away, larger stores mean more walking to find same SKUs, etc, so shop time is longer) and ii) customers will use Dollar for weekday fill-in shopping and towards the end of month when wallet is stretched. Assuming this is true (haven’t done the work to support these claims), you have to get comfortable that the customer’s fill-in shopping behavior won’t change. Will prices at WMT get so much better that it’s worth the weekday visit vs. a dollar store? Same with assortment. Will customers lean into delivery and online? I don’t know the answers. Question is how protected are the fill-in trips. Dollar is about driving traffic and stealing that fill-in trip from WMT, so you need comfort that that’s protected. Just some thoughts
astute points. fwiw, I don't think one can get comfortable with consumer shopping behaviors, no matter how much work one does, it is an ever-changing landscape.
imo WMT is the largest threat, the cross-shopping% between WMT and dollar store are increasing at a steady pace, pricing, merchandising, delivery, WMT is doing all things right, and gaining shares in varied income cohorts.
On your store performance point, I think a big point is let’s go look at store level performance and relative distance to a nearest WMT. Do the ones close to a WMT perform significantly worse? Probably. Obviously ‘close’ will depend on the urbanicity. But maybe that’s a key factor in closing stores.
Did Rick institute practices that were ‘good’ for FD or did he try recreating the DG playbook at the FD banner? Which might not work as these banners service vastly different customers, with different assortments, and in different urbanities?
There weren't enough commentaries at that level to answer your Q with certainty. One key issue FD battled with is sub-optimal location. one can do all things right, but if location is not a fit, you can't turn it around (as you allude to as well).
so some recent store performance improvement, if I have to guess, is more due to accelerated low-quality store closing than operating playbook per se.
I see that’s really interesting. Interesting point on sub optimal location. Do you have a sense of i) in which markets / urbanities did Rick focus on opening new stores? Have they mostly opened in rural, for example? And ii) they’ve historically struggled in rural, so curious if that’s where the focus has been, if that was a bad decision. Lastly, if you were CEO tomorrow, what 3 things would you do to turn around the banker? Mostly interested in this question!
On DT, I haven't looked into their new opening locations, but their focus/strengthes are always on the suburb, and I don't recall any strategy shift on that front. so I would assume the same.
if I were CEO?... man, I'm not paid enough to worry about that :-)
How much of a threat is WMT, Aldi and Temu to the dollar channel? Are delivery and pick-up options that they’ve rolled out stealing customers from dollar? Or are these services targeted towards existing WMT customers (meaning that WMT offers pickup isn’t a traffic draw from dollar to WMT as the dollar customer doesn’t care about delivery and pick up)
I agree with that. If you look at wallet share, dollar customers spend a majority of their retail wallet at WMT. Management uses the talk track that customers will i) shop at WMT on weekends when they have more time (parking is farther away, larger stores mean more walking to find same SKUs, etc, so shop time is longer) and ii) customers will use Dollar for weekday fill-in shopping and towards the end of month when wallet is stretched. Assuming this is true (haven’t done the work to support these claims), you have to get comfortable that the customer’s fill-in shopping behavior won’t change. Will prices at WMT get so much better that it’s worth the weekday visit vs. a dollar store? Same with assortment. Will customers lean into delivery and online? I don’t know the answers. Question is how protected are the fill-in trips. Dollar is about driving traffic and stealing that fill-in trip from WMT, so you need comfort that that’s protected. Just some thoughts
astute points. fwiw, I don't think one can get comfortable with consumer shopping behaviors, no matter how much work one does, it is an ever-changing landscape.
Good questions, no easy answers :-)
imo WMT is the largest threat, the cross-shopping% between WMT and dollar store are increasing at a steady pace, pricing, merchandising, delivery, WMT is doing all things right, and gaining shares in varied income cohorts.
On your store performance point, I think a big point is let’s go look at store level performance and relative distance to a nearest WMT. Do the ones close to a WMT perform significantly worse? Probably. Obviously ‘close’ will depend on the urbanicity. But maybe that’s a key factor in closing stores.
Did Rick institute practices that were ‘good’ for FD or did he try recreating the DG playbook at the FD banner? Which might not work as these banners service vastly different customers, with different assortments, and in different urbanities?
There weren't enough commentaries at that level to answer your Q with certainty. One key issue FD battled with is sub-optimal location. one can do all things right, but if location is not a fit, you can't turn it around (as you allude to as well).
so some recent store performance improvement, if I have to guess, is more due to accelerated low-quality store closing than operating playbook per se.
I see that’s really interesting. Interesting point on sub optimal location. Do you have a sense of i) in which markets / urbanities did Rick focus on opening new stores? Have they mostly opened in rural, for example? And ii) they’ve historically struggled in rural, so curious if that’s where the focus has been, if that was a bad decision. Lastly, if you were CEO tomorrow, what 3 things would you do to turn around the banker? Mostly interested in this question!
On FD, I don't think there is much new opening.
On DT, I haven't looked into their new opening locations, but their focus/strengthes are always on the suburb, and I don't recall any strategy shift on that front. so I would assume the same.
if I were CEO?... man, I'm not paid enough to worry about that :-)
Fair enough! Appreciate the thoughts, thanks!