I’ve owned FDO since Sept 2009 so I’ve been really happy with it until recently. But I haven’t been in an FDO store in 20 years. In the last few months they opened a store a few miles from me so I stopped off today. The store is in Huntington Station, NY. Before FDO, it was a run-down local dollar store. FDO obviously just changed the signage because the carpeting is stained and the shelving is old, even though the store is relatively new.
That part didn’t surprise or disappoint me much. I knew that FDO often takes advantage of cheap rentals and it doesn’t spend much on furnishings. OK with me.
But what surprised me was the merchandise. The place looked like a rundown Walgreens without the pharmacy. There was no apparent attempt to stick with anything like dollar pricing. They sold regular boxes of Cheerios and Kellogg-branded cereal for $ 3.25, for example. Or Planters nuts cans for $ 6.75. I would guess more than half the merchandise was brand name, with most prices between $ 3 and $ 6. The prices might be slightly cheaper than regular supermarkets or drug stores, but not by much.
Even the private label stuff wasn’t cheap. I bought a package of 100 paper plates for $ 2.50. On my way home, I stopped at a supermarket (not even Wal-Mart) and the paper plates were $ 3.59 for 200. So I guess FDO kept the package smaller to lower the price, but they weren’t shooting for $ 1.
There was very little special size items to keep under $ 1. I would guess that food and related items made up more than half the store. Clothing and household stuff was almost nonexistent. Toys and seasonal (Christmas stuff already) were probably 20% of the floor space. Toiletries were maybe 10- 15% of the space.
Anyway, I was amazed – I walked thru a DLTR store maybe 6 months ago, and it was very different. Not better, just different. DLTR obviously keeps to the 99.9 cents pricing, so there’s a lot more private label and smaller sizes.
Could anyone tell me if my experience with FDO is normal these days? I wasn’t expecting anything special, but I was expecting lower prices, however FDO gets there.
For any dollar store buyer, it gets harder and harder to buy things to sell in a dollar store for one dollar. Ideally, a dollar store buyer has to find things for .50 cents or less and in very large quantities to sell and make a profit after the costs of buying the merchandise, transportation, labor, etc. When you cannot find merchandise to buy and sell for one dollar, what do you do? Move to a higher price point. Hence, nowadays not all dollar store are dollar stores. Also, a dollar store moves into areas closer to the customers versus Wal-Mart, so the customer has a shorter round trip drive. Look at the distance between all the Wal-Marts in your area versus all the dollar stores. A dollar store should be closer to where you live than a Wal-Mart.
The chain is currently run by drug store second stringers, so it's no surprise to see the continuing shift in that direction. The condition issue is apparent because the 2 formats differ greatly in manpower needs...most stores operate with skelton staffing - maximum of 1-2 people, while the drug store format requires 1-2 more people per shift...current results could very well be overshadowed by increasing shrinkage and sales impacted by improper staffing levels - unless changes are made over the next 12-18 months - the house of cards continues to collapse.