MATTHEWS, N.C. — One consequence of the government shutdown may be the erosion of consumer confidence among the poor, noted dollar store operator Howard Levine, executive chairman and CEO of Family Dollar, in a conference call with analysts last week. "The way I think about these kind of things is it's just not a help to consumer confidence," he said. "The threat of the shutdown, the uncertainty regarding some of the government assistance that our consumers impact, the uncertainty around job growth are very real to our customer everyday."
According to Levine, more than 50% of the shoppers walking the Family Dollar aisle benefit from some sort of government assistance. "So when they hear and read about all this uncertainty, I think it impacts their confidence regarding their outlook."
"While many higher-income consumers are feeling better and more confident about the future, our core customer continues to struggle," Michael Bloom, Family Dollar president and COO remarked earlier in the call. "They are dealing with tepid job growth, higher taxes and reductions in government assistance programs. The uncertainty is likely to continue as our government debates the future of many of these programs. In addition, we will continue to face difficult consumables comp comparisons. Our most difficult comparison of the year will be in the first quarter as we anniversary about a 12% comp increase in consumables," he said. "[However], these comparisons will ease as we move throughout fiscal 2014."
But the uncertainty on Main Street is becoming a challenge for those looking to meet and beat expectations on Wall Street. Family Dollar has significantly increased assortment in an effort to become more relevant to more shoppers, Bloom said. "The customer response has been very strong, and these enhancements are driving more trips. But we see further opportunities to make improvements in key consumables categories" he said. "As retailers, and you have heard me say this on several occasions, this is what we do. This year, we will continue to optimize our consumables assortment and continue to focus on being first with new items and with innovation. We will continue to sharpen our pricing strategy, making sure that we are priced right in key areas where the customer expects us to be right. We will continue to make strategic price investments to further enhance our strong value perception."
And Family Dollar is rolling out its latest look to consumers featuring an enhanced checkout area to entice return trips. "This area has been redesigned to increase the speed of checkout, improve the customer and team member flow and experience, and most importantly, drive sales of high-impulse and high-margin merchandise," Bloom said. "The new checkout will be in all renovated and new stores beginning in January."