Are Dollar Stores The New Black?

New York bargain news from WWD

by WWD Staff
Posted Friday July 17, 2009
From WWD.COM

Are Dollar Stores The New Black?

Years ago, as the economy stumbled, it was noticed that woman started trading down from department stores and even drugstores to discount stores. But in this recession, women have yet another choice — dollar stores.

Dollar store retailers aren’t blind to the trend. They are dusting off beauty departments and going to vendors for special deals. Today’s dollar stores are far from dirty and dingy. Most, in fact, sell merchandise for more than a dollar so the name has become a misnomer. Visits to dollar chains reveals brands from Maybelline, Revlon and Cover Girl, as well as some lines created specially for the budget-minded consumer. A case in point is LA Colors, and Markwins is currently revamping some of its properties for distribution in the dollar channel. Mike Botterman of 99 Cents Only stores confirmed vendors are creating special items for his chain which is on a fast growth track and is considered a cool place to shop by many patrons, he said. The largest dollar chain is Dollar General. Dollar General has a defined and planogrammed beauty department. Dollar General, along with most of the dollar chains are producing double-digit profits gains. Last year, Dollar Tree broke into the Fortune 500 and was its top-performing stock.

The reason for the growth is undeniably that women are expanding what they purchase at budget stores. With more consumers trying to be smart about purchasing, they feel savvy about finding a deal. Research from Mintel reveals most shoppers are cutting back and no longer buying a lipstick as a pick me up. But, six out of 10 said they haven’t given up on beauty regimens and that bodes well for dollar stores who can provide their needs as they go what Mintel calls “austerity chic.”

Management of dollar chains is also getting more professional. Dollar General has Rick Dreiling as chief executive officer — he came from Duane Reade where he enacted major improvements. He is focusing on presentation instead of just piling cheap items on displays. He’s already improved the merchandise mix at Dollar General, financial analysts said. These moves are making vendors take notice of dollar chains.

One dollar store retailer summed it up: “Suppliers used to cancel meetings with me at ECRM or Marketplace [trade shows], now I’m at the head of their list.”

The only caution for dollar stores is to continue to spruce up in order to not only attract shoppers, but keep them once they have more money.
People, Places and Things

A few words with Sally Hershberger, the famed hair stylist (her cuts can cost $800) turned marketing whiz as she dazzled visitors to the NACDS Marketplace meeting in Boston last month.

WWDBeautyNews: You’ve expanded beyond Walgreens. Where are items sold now?

Hershberger: We are looking to grow and we’ve entered Shoppers Drug Mart, Ulta and Target. We have a national print campaign.

WWDBeautyNews: Is timing bad for a premium hair care line right now? Hershberger: No! As bad as everything is, this is a great time to spend [on advertising, growth]. It’s an incredible time to build business.

What’s In Store

Beauty Foods Slow To Take Off In U.K.: Datamonitor reports the beauty foods featuring benefits such as antiaging are not catching on as fast as marketers had hoped. Consumers aren’t buying into the “you are what you eat,” theory.

No Gray: The company that brought a product to correct a bad at-home hair color, DevloPlus, now has a formula for at-home use to properly cover gray. Called No Gray, the item is stocked in Walgreens, Duane Reade, Rite Aid and Bed, Bath & Beyond.

-from wwd.com

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Posted by at 08:00 PM
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