Family Dollar 2005 Annual Report Download - page 12

The New Store Initiative
value
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Our small stores provide value and neighbo rhoo d
convenience to lo w and lower-middle inco me
consumers, one of the fastest gro wing population
segments in the U.S. During the last five years, the
number of households with annual inco me below
$25,000 has increased mo re than ten percent, and
the number of families with inco me below the po verty
level has grown almost eight percent. To address
this under-served po pulation, we have aggressively
opened new stores to pro vide more value and
convenience to this growing customer base.
To maximize the return o n our investment, we
do n’t place new Family Dollar stores in the first empty
lot we see or in any retail strip center with available
space. Sophisticated evaluation processes and
techno logy ensure that new Family Dollar stores are
advantageo usly located in the neighborhoods of our
Customers, providing co nvenient sho pping for their
everyday needs. Advanced modeling techniques help
us predict which neighborhoods will provide us with
the best opportunity fo r sales and profitability. We
consider many variables in deciding where to locate a
store, including customer demographics and site
attributes such as traffic patterns, visibility and
accessibility, as well as the overall projected financial
return compared to the cost of the investment.
New sto res not only increase our sales as we
serve new Customers, but also create valuable devel-
opment oppo rtunities for Family Dollar Associates.
In fact, in 2005 many o f o ur new store managers were
pro moted from within o ur organization. At right, Patty,
a dedicated Family Dollar Store Manager, arranges a
festive holiday presentation to build excitement for
her Customers during Grand Opening Day at the new
store she will manage.
In 2005, we o pened 500 new stores. However,
with a large number of those new stores opened in
the last two months of the fiscal year, we created
unnecessary cost and operational inefficiencies. To
create more value for o ur Shareho lders, we will slow
our new store gro wth to about 400 stores in 2006
and build pro cesses that support a more balanced
schedule of store o penings. Creating a mo re steady
flow of new store openings will enable us to more
efficiently accelerate our growth in the future,
creating greater value for our Shareho lders, o ur
Customers and our Associates.