Family Dollar 2010 Annual Report Download - page 27

• We expanded our operating hours in substantially all of our stores to increase the convenience of the
shopping experience. In addition, to reinforce our value proposition and increase awareness of and
loyalty to the Family Dollar brand, we worked to better integrate all of our customer communications.
We increased the frequency of our communications to customers, and we improved our in-store
communications to reinforce our values and brand offering.
• We continued our space re-alignment efforts to accommodate strong customer demand for consumable
merchandise and improve the in-store shopping experience. These efforts included re-aligning the
space in our stores to support an expanded assortment of key traffic-driving categories, improving
merchandise adjacencies and enhancing merchandise presentations. Since we began these efforts in
fiscal 2009, approximately 65% of our stores have completed the layout changes.
• Through our price management work, the continued development of our private brand offering, and our
global sourcing efforts, we improved our purchase mark-ups and offset the impact of the shift in the
merchandise mix to more lower-margin consumable merchandise.
• We continued to focus on inventory productivity, and we lowered our inventory levels in more
discretionary merchandise categories. While our total inventories increased at the end of fiscal 2010,
due primarily to the expansion of our assortment of consumable merchandise and to support higher
sales growth, our inventory levels remain well controlled. Lower levels of discretionary merchandise
have reduced our exposure to seasonal markdowns, and we believe our focus on inventory productivity
has contributed to lower inventory shrinkage and a reduction in workers’ compensation and general
liability claims.
• We made great progress in our efforts to be a more compelling place to work. We strengthened our
pay-for-performance culture and expanded our training and development programs. As a result, we
drove continued improvement in our employee retention and internal promotion metrics, delivering
more consistent execution for customers, increasing productivity and reducing costs.
Fiscal 2011 Outlook
Building on the improvements we have made over the past several years, we plan to continue to strengthen
our value and convenience proposition in fiscal 2011. In addition, we plan to re-accelerate our new store growth
while also launching a comprehensive store renovation program.
Our new store performance has improved significantly in the last several years as a result of the utilization
of stronger site selection tools as well as enhancements driven by our strategic initiatives. Our operational
improvements, combined with softening real estate markets and a growing customer base, have resulted in
additional opportunities for new store growth. During fiscal 2011, we plan to open approximately 300 new stores,
a 50% increase over fiscal 2010 openings. We also expect to continue building the pipeline for further
acceleration of our new store growth over the next two to three years.
Leveraging our concept renewal efforts, enhanced merchandising and supply chain capabilities, a refreshed
store technology platform, and a better trained and more productive workforce, we are initiating a comprehensive
renovation program intended to re-energize the Family Dollar brand. During fiscal 2011, we plan to renovate 600
to 800 stores at a projected cost of $100,000 to $130,000 per store. The renovations will address both the interior
and exterior of the stores and will create more customer-focused assortments and layouts, rejuvenated physical
stores and more customer-centric teams.
While we are making significant investments to drive revenue growth, we also continue to pursue
opportunities to further enhance our profitability and financial returns. Key areas of focus will include the
continued expansion of our private brand programs and the continued development of our global sourcing
capabilities, as well as our ongoing efforts to improve operational productivity. See Part I—Item 1—“Business”
for more information on our current strategic initiatives.
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