Family Dollar 2012 Annual Report Download - page 10

earlier than originally planned. In fiscal 2012, we opened 475 new stores, a more than 50% increase over fiscal
2011 new store openings, and we increased our selling square footage by 6.4%. Also, in fiscal 2012, we opened
our first stores in California. We believe the foundation we built over the past several years, coupled with the
continued investments we are making to our supply chain, have positioned us for sustainable new store growth
into the future. In fiscal 2013, we expect to open approximately 500 new stores.
Private brands represent an opportunity to increase sales and profitability. In fiscal 2012, we made further
progress in increasing our penetration of private brands. For the year, private brands sales increased
approximately 9% over fiscal 2011. Private brands consumable sales performed especially well, increasing 16%
over fiscal 2011. In fiscal 2012, private brands sales represented approximately 25% of total sales and
approximately 17% of total consumable sales. To drive this growth, we added nearly 400 private brand
consumables SKUs to our assortment in fiscal 2012. Building on this momentum, in fiscal 2013 we intend to
increase our penetration of private brands even further, with a continued focus on expanding our assortment of
private brands consumables. We expect to launch new brands that will offer our customers more quality and
value while also refreshing a few of our existing brands to broaden their appeal. And, we intend to drive greater
awareness of our private brands program through increased marketing and visual merchandising support.
In fiscal 2012, approximately 24% of our purchased merchandise (at cost) was manufactured overseas.
While we continue to rely extensively on third parties to help us procure this merchandise, we are progressively
moving toward a more efficient, direct model. In fiscal 2012, we expanded our teams in our Hong Kong and
Shenzhen, China offices. In fiscal 2013, we expect to open an office in Shanghai, China. Today, these teams are
strengthening and expanding our supplier network. We also invested in new tools to help us manage the product
development cycle better. As a result of these investments, we increased our direct imports by more than 40% in
fiscal 2012, as compared to fiscal 2011. In fiscal 2013, we plan to continue to expand our Global Sourcing teams,
develop stronger processes to help us integrate our sourcing activities with our category management efforts, and
continue to expand our supplier network.
Drive continuous improvement
As a low-cost provider, protecting our strong price perception and delivering value to our customers is
critical to our long-term success. Over the last several years, we have invested significantly in new
merchandising processes, including price management capabilities, customer research and category management
tools. These investments have enabled us to navigate challenging macro-economic environments. During fiscal
2012, our teams worked diligently to create the right merchandise value proposition for our customers using
these merchandising processes, and our customers continued to respond favorably to our ongoing quality-
improvement efforts.
In fiscal 2012, we formed a six-year, exclusive partnership with McLane Company, Inc. (“McLane”), a
highly successful supply chain services company. This partnership will allow us to carry a consistent assortment,
improve in-stock levels in our refrigerated and frozen merchandise, consolidate a fragmented network of regional
wholesalers to one national wholesaler, and distribute tobacco products to our stores efficiently. All of these
improvements are expected to drive additional trips into our stores. McLane will also distribute selected
categories outside of refrigerated and frozen merchandise, providing flexibility to our distribution network for
potential new SKUs. McLane began delivering merchandise to our stores in September 2012.
In fiscal 2011, we launched an initiative designed to help us leverage our workforce more effectively,
improve store-level execution and increase workforce productivity. Through this effort, we re-engineered many
of our core store processes, including shelf re-stocking, the check-out experience, store recovery and in-store
merchandising. Through the application of new technology and processes, we implemented new time and
attendance procedures, addressed workflow and task management, and improved store-level execution. These
improvements allowed us to more effectively manage store labor in fiscal 2012, a significant portion of our core
expenses.
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