by Jessica DiNapoli
NEW YORK (Reuters) – Brand-name homegrown makers such as Dunkin’ Coffee and Schick Razors are bulking up sales teams and adding specialty and low-cost products to the shelves of America’s ubiquitous dollar stores to reach the more budget-conscious. Are. Shopkeeper.
Razor makers Edgewell Personal Care Co. and Kraft Heinz Co. have over the past year overhauled or created dedicated new teams to work with the biggest US dollar stores, such as Dollar Tree Inc. and Dollar General Corp.
Executives said in recent interviews that JM Smucker Co. is considering bringing seasonal flavors of its packaged Dunkin’ Coffee to stores, while Hershey Co. is in talks to launch its Dot Pretzels to retailers.
Makers of food and household staples are venturing deeper into dollar stores as the low-cost retailer opens thousands of locations each year. They’re adding fresh products and attracting buyers weighed down by inflation, giving manufacturers a chance to make up for declining sales.
“It used to be, you ended up with other retailers’ unsold inventory,” said Ed Johnson, a principal at Deloitte Consulting LLP focused on retail and consumer products.
Now the maker of the pantry staple is treating dollar chains with the same rigor as Walmart, Johnson said.
A Tufts University study found that low-cost stores, which number more than 35,000 in the US, are the fastest-growing US food retailer by share of household spending – although Dollar Tree stopped selling eggs.
Executives at packaged food companies such as Conagra Brands Inc. say stores are becoming increasingly attractive as they install more freezers and refrigerators for items such as budget TV dinners, breakfast sandwiches and yogurt.
Proprietary data provided by Kraft Heinz showed Dollar Tree’s Family Dollar chain had the second-highest increase in food and beverage sales in the first quarter through February 12, up 14.1%, second only to rivals Walmart Inc. and Leaving behind Sam’s Club, Target Corp. and Kroger. Co.
Dollar Tree, which is scheduled to report earnings on May 25, declined to comment when asked about the data.
But, makers of national brands face stiff competition as dollar stores expand their private label selections, even as they rely on well-known brands like Coke and Procter & Gamble Co.’s Tide to attract shoppers. continue to trust.
“The main plays are frozen vegetables,” said Jim Griffin, Damon’s executive vice president, “and frozen fruit, in an expansion of dollar stores into private label food, working with retailers on their store brands.” “There is strong consumer acceptance.”
Griffin said dollar stores are also introducing more “premium” private label brands, such as Dollar General’s Nature’s Menu for Pets.
JM Smucker is looking to expand its line-up of Dunkin’ packaged coffee at dollar stores with seasonal flavors as the food maker sees shoppers buying more than the retailer needs, the Orville, Ohio-based head of sales Robert Crane said. company.
Crane said it could sell its hazelnut and peanut butter and honey varieties of its frozen Uncrustable sandwiches at dollar stores as it builds a new factory to increase capacity.
Most dollar stores—which are less than half the size of a Walmart location or most traditional grocery stores—sell only the fastest-selling, basic items due to limited shelf space.
Crane said the metric dollar store executives look for is the closest to “dollars per point of distribution” for individual products, which measures how much each item sells for over time.
“If it doesn’t meet their threshold, they’ll look for space elsewhere,” he said.
After launching its fall-themed Pumpkin Spice Cup of Noodles at Walmart — and seeing consumers pounce on it — Nissin Foods extended the product to dollar stores, said Priscilla Stanton, a marketing executive at the noodle maker.
Edgewell introduced three-count packages of men’s and women’s Schick three-blade razors to Dollar General last year because they wanted to offer products they sold at lower prices than other retailers, due to the company’s North America business. Chairman Eric O’Toole said in the interview.
The razors sell for $5.35 according to Dollar General’s website. A spokeswoman said Edgewell introduced the package because general shoppers at Dollar General were previously buying lower-priced shave kits instead of refill packs to reduce frequent out-of-pocket costs.
A spokeswoman said Kraft-Heinz also formed a new team of five people late last year to identify and develop products for the dollar stores.
Another spokeswoman said the macaroni and cheese maker “wants to change the perception that dollar places don’t offer ‘better’ for you” dining options for families.
“We’re striving to provide solutions that show the dollar space as more than ‘soda and snack,’” the spokesperson said.
Arnab Sinha with the Boston Consulting Group said that consumer product companies are also plowing into US dollar stores as a defensive strategy because of what they’ve seen in Europe — the growth and popularity of discounters like Aldi and Lidl, which offer affordable prices. Offering private label goods. those chains are growing in America
“As a (consumer packaged goods company), of course, it’s an issue, I don’t want people moving away from retail formats that have a really nice selection of brands that are almost all private label,” They said.
The Hershey Company is in discussions with dollar stores to introduce Dot’s pretzels as part of an effort to grow the brand beyond its core Midwestern base, said Kristen Riggs, president of the chocolate maker’s salty snacks business.
Reese’s Cup maker to buy Dots in 2021 to expand beyond chocolate.
“I think that channel is unused right now,” Riggs said. “We’re talking to the customer about the right opportunity, timing, pack size, right price point for the dollar customer.”
(Reporting by Jessica DiNapoli in New York; Editing by Anna Driver)