A critical evaluation of the company reveals that Family Dollar’s retail strategy has been structured in a manner necessary to cope with both bad and good economic times. For instance, during bad economic times, say a recession, the store’s goals are often reevaluated in order to continue building customer experience and loyalty. In general, evaluation postulates that Family Store’s retail strategy of offering customer with convenience and value continuous to appeal customers of different demographics; both low-income and middle income families. As a way of strengthening the effectiveness of the store’s retail strategy, Family Dollar has initiated a number of programs aimed at increasing the store’s customer relevancy, convenience and perceived customer value (Seeking Alpha 1). In addition, it is precise that Family Dollar has a flexible retail strategy, which makes it easier for the store to alter the prices of its goods. This implies that the store can decrease or increase its price according depending on the prevailing economic conditions.
Family Dollar’s action of reducing the variety of brands while increasing selection within a brand has resulted to a number of advantages and disadvantages. In terms of cons, it can be argued that this action will help the store to lock-in is suppliers. This is because; increasing section within a brand is likely to elevate Family Dollar’s bargaining power over its suppliers (Hill and Jones 52). Besides, this move will help boost the store’s restocking and ordering process. In addition, it is argued that this action is likely to increase the number of products, of each brand, that will be stocked in the store. The analyses of cons reveal that by reducing the number of brands, the store will be limiting consumer choice. This implies that the customer will to have an opportunity to compare features (quality, packaging and price) of different brands before making their purchase decisions.
Based on the case, it is clear that Family Dollar is coupled with a number of competitive advantages and disadvantages over box stores and conventional supermarkets. Family Dollar’s competitive advantages can be attributed to a number of factors. First, the store offers products at relatively cheap prices compared to its rivals. This pricing strategy makes the store competitive since it is able to sell more goods, and attract new customers. Second, Family Dollar stores are strategically located near target markets. For box stores and supermarkets, the situation is worse. Here, customers often scramble for parking spaces in huge shopping districts. This situation makes Family Dollar stores highly attractive to potential customers. In addition, Family Dollar offers differentiated products. For instance, the stores offer clothing for families, which is not available in box stores and supermarkets.
In spite of its competitive advantage, Family Dollar store has some competitive disadvantages. First, it can be argued that the store has limited resources compared to large supermarkets and box stores. The inadequate resources restrict Family Dollar from competing effectively, particularly through price wars. Moreover, analysis reveals that Family Dollar’s competitive has been threatened as large box stores continue to many open small box formats in urban markets. This situation is likely to hamper Family Dollar’s competitive market position.
Owing to a number of researches, it can rationally be argued that full-line discount stores have the capacity to perform better as compared to variety stores such as Family Dollar. However, for this to be achieved, full-line stores need to adopt specific competition marketing strategies. First, they can accomplish this by implementing a cost leadership strategy. This will enable them reduce their overall costs, and hence improve their profitability (Hitt, Ireland and Hoskisson108). The reduction in costs can also make full-line discount stores charge competitive (lower) prices for their goods. Second, full-line stores can become competitive if they work on their packaging. For instance, they can pack their goods in different sizes. This will help attract even low income customers who may prefer goods packed in small sizes. Another potential source of competitiveness can result from expansion and diversification. By offering a variety of goods (brand names) and opening up new stores, full-line discount stores will not only increase market share but also minimize the risks attributed to having a single store. Finally, based on research, it is precise that by modifying the full-line discount stores’ layout, more customers may be attracted to them.
Hill, Charles W. L, and Gareth R. Jones. Strategic Management Theory: An Integrated Approach. Boston, MA: Houghton Mifflin, 2010. Print.
Hitt, Michael A, R D. Ireland, and Robert E. Hoskisson. Strategic Management: Competitiveness & Globalization. Mason, OH: South-Western Cengage Learning, 2011. Print.
Seeking Alpha. Family Dollar Stores - Long-Term Appeal After The Company Guides For Strong Future Earnings Growth. Family Dollar Stores, 6 October. 2012. Web. 29 April 2013.