Family Dollar Helps CPGs Know the Value Shopper

Schaumburg, Ill. — Major manufacturers have long ignored the dollar channel and the value-focused consumers who shop there. But Family Dollar senior vice president and chief marketing officer Jocelyn Wong wants to change that.“Most of us in the room are not dollar shoppers,” Wong told Shopper Marketing Summit attendees in March during her general session presentation. “We’re nothing like the value customer. We don’t understand who she is, what she’s about and the struggles she deals with. Usually, the dollar stores are on the other side of the tracks. It’s a little scary, a little intimidating. For me it represents a part of my childhood I’d rather not go back to. ‘It’s where the poor people shop.’”“We need your partnerships. We need your brands. We know our customers value national brands.”— Jocelyn Wong, SVP and CMO, Family DollarBut that fear puts CPGs out of touch with a large segment of American consumers who enjoy shopping at dollar stores. “For our customers, our most loyal customers, the dollar store represents a place where they do feel safe, where they do feel at home.”Wong broke down the value segment into four groups:Riding the Poverty LineNew AmericansNouveau PoorCautiously OptimisticWith approximately 10% of Americans living in poverty, some of Family Dollar’s most frequent shoppers are four-person households with incomes of $25,000 or less. But other important segments are immigrants, particularly Hispanics, who are looking for both brands from their place of origin and quality national brands, and men ages 18-35 who prefer a minimalist lifestyle and are looking for simple ways to save. The cautiously optimistic segment are less frequent shoppers, consumers who are moving from a “must save” environment but could still be loyal to a store that helps them spend responsibly.Family Dollar further subdivides its customer segments into four additional groups:Jo(e). Over-indexing male and Hispanic, the average Joe doesn’t love shopping or have strong retail affinities, so convenience is important.Dominique. A deal seeker who skews youngest and lowest income of the segments, Dominique lives in rural towns and seeks out coupons and deals because she has to. She also has more access to big box, drug and grocery stores than other segments.Peggy. Skewing older and living in the suburbs, Peggy is a light shopper who doesn’t love coming to dollar stores because she views them as dirty and not stocking quality products. She recognizes that their seasonal deals can make them “good enough” for some trips like buying wrapping paper or ornaments.Patrice. Urban poor and reliant on public transit because she doesn’t have a car, Patrice can include single moms trying to give their kids what they need and what they want, though discretionary spending is limited.Faye. Urban but with more access to a car and thus other retailers including big box, she doesn’t like couponing and looking for deals. She prefers to rely on a store with everyday low prices, but she’s not loyal to a particular retailer.Consumers categorized as Patrice and Faye represent 50% of dollars spent at Family Dollar, with Jo(e) accounting for 15% and Dominique for 27%. Learning that breakdown made Family Dollar decide to stop focusing on growing its less loyal segments and instead work to ensure that its biggest shoppers don’t leave.The retailer is working to reinforce its everyday low price value proposition, which is appealing to shoppers who don’t have time to read circulars. Wong said internal cost-saving measures help them keep costs low, including seemingly small policies like making double-sided copies and not using color toner in their printers. She said even chief executive officer Howard Levine picks up fallen paper clips.“We don’t waste paper clips at Family Dollar,” Wong said. “We make these sacrifices so that we can give her the confidence of everyday low prices. We champion value for her so that we can be her trusted neighborhood store and her family can make ends meet.”The retailer has a small advertising budget but compensates by engaging with consumers digitally. Family Dollar is in the process of updating its website to add more blogs and sponsored content and enable shoppers to link their local store to their account to browse its unique product assortment. The retailer is also considering allowing users to provide ratings and reviews.Family Dollar also has built strong social media followings, regularly offering coupons and savings through Twitter and amassing 2 million Facebook fans. “Each one of our social nodes and channels has a relevant place for her,” said Catapult executive vice president, managing director Michael Miller, who shared the stage with Wong.Along with pricing, Family Dollar is also trying to appeal to consumers’ unique needs and values. The retailer works with nonprofits such as Feeding America and Boys & Girls Clubs of America to give consumers a sense of community and shared goals. Wong noted that during the recession, wealthy people reduced the amount of money they donated to charity but poor people actually increased their charitable spending. “For our customers, giving is so critical.”Wong said Family Dollar hopes that more CPGs will work with them to better cater to the value shopper. “We need your partnerships. We need your brands. One of the biggest barriers Family Dollar has is quality perception. We know our customers value national brands. For them it’s a badge of honor.”

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