Fresh produce, while a difficult category under the dollar-store business model, can be beneficial for retailers and suppliers alike from a traffic and profitability standpoint.
Grower-shippers and distributors of high-volume fruits and vegetables such as apples, pears, potatoes, and oranges can create strong ongoing programs with dollar stores if they can offer a year-round supply at the volume and price points needed.
“The selection is very limited, and it should be,” comments Julie DeWolf, founder and CEO of DeWolf Marketing BB #:376983 in Redondo Beach, CA. “You’re not looking for golden kiwi in a dollar store; you’re looking for apples or potatoes.”
“They’re not set up for a wide array of specialty produce,” agrees Cole Firman, who works in sales and marketing at Coosemans L.A. Shipping, Inc. BB #:154447 in Vernon, CA.
“But they’re open to taking something unique and putting out seasonal or a one-time shot,” he adds. “We use dollar stores as a way to offshoot surplus produce, when you know a grower has a load that needs to move.”
Dollar stores typically do not have fixed shelving, so they can move produce around for the opportunistic buys on which they rely to add variety at very low prices.
For specialty produce providers, whose product is more expensive and not available all year, the business may be hit-or-miss, but there’s still sales potential.
Firman says ongoing struggles at the ports also increased dollar store access to fruits and vegetables, as vendors faced with delays need to quickly find a home for their perishables.
“You can move quite a bit of volume in dollar stores,” he says.
This seems to be reflected in Dollar General’s ongoing renovations: the company has reported that traditional store remodels, which includes adding 22 new coolers, saw a sales lift of 4 to 5 percent; while at bigger stores, which can accommodate 34 larger coolers, sales increased 10 to 15 percent.
Its produce assortment includes the top 20 items typically sold in grocery stores and about 80 percent of the produce categories carried by most grocers, according to the company.
Family Dollar has also reaped rewards from its early forays into produce, reporting that initial efforts in the category have resulted in a higher average purchase per customer.
Branded product, which in some cases is limited to a few commodities in specific sizes, as well as lower grade or less aesthetically pleasing items, can also be found in dollar stores at low prices, with suppliers, stores, and shoppers all reaping the benefits.
“There’s an argument to be made for selling branded produce there,” DeWolf notes. “But some grower-shippers are probably not as comfortable with branded product in that environment.”
This is an excerpt from the cover story of the March/April 2022 issue of Produce Blueprints Magazine. Click here to read the whole issue.