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56 JOSEPH W. LEONARD

Beyond the four broad product categories, Family Dollar’s merchandise assortment
are divided into 11 product classifications that include apparel, food, cleaning and paper
products, home decor, beauty and health aids, toys, pet products, automotive products,
domestics, seasonal goods, and electronics.
Family Dollar’s merchandise includes national brands, Family Dollar private labels,
and unbranded items that sell for less than $10. Whereas some other discount retailers focus
on factory closeouts, these make up only about 2 percent of Family Dollar’s sales. The com-
pany carries many name-brand items found in supermarkets, such as Tide, Colgate, and
Clorox. Some analysts estimate that Family Dollar’s prices are 20 to 40 percent cheaper
than those found in traditional supermarkets and are roughly on par with big-box discoun-
ters such as Wal-Mart and Target or lower.
Family Dollar emphasizes convenience for its customers. It sees the typical scenario
as based on easy-to-shop neighborhood locations that allow “Mom to get what she needs,
close to home to take care of her family.” In 2008, the company introduced a new logo to
facilitate achieving this emphasis. Along with the new logo, Family Dollar has developed
a new tag line: “My family. My family dollar.” These recent updates assist the company
toward conveying its commitment to providing value and convenience with a family focus.
Family Dollar does not make use of Web site sales. The company has lagged behind
many other retailers in accepting food stamps and other payment forms. Family Dollar and its
dollar-store direct competitors still face an image problem of a perception of an old, cluttered,
and dirty store. One customer complained that one week the store might carry Green Giant
canned corn and then Libby’s the next. From the management of Family Dollar’s perspective,
this would be termed “opportunistic buying.” By late 2009, Family Dollar plans to introduce
250 new edible items, including Triscuits and Double Stuf Oreos as a way to attract more cus-
tomers. Some would categorize the company’s increased emphasis on food and slightly
increased plan to put more stores in urban areas as a differentiation strategy.

Human Resources
About 15 percent of Family Dollar’s top 41 executives are women. Family Dollars’ corporate
board of directors has 10 members ranging in age from 47 to 78 (with a mean and median age
in the mid-60s), which includes three women but only one insider (Howard R. Levine) with
the other nine being nonemployees of the company.
In July 2006, Family Dollar lost a federal court case in Tuscaloosa, Alabama, that
amounted to $35.6 million. This decision was upheld on December 16, 2008, by the U.S. 11th
Circuit Court. The case involved store managers not being paid for overtime. The class action
judgment was on behalf of 1,424 managers. The affected managers were awarded back pay.
The managers had argued that Family Dollar owed them overtime wages under the Fair Labor
Standards Act (FLSA). Family Dollar’s corporate management contended that the managers
held executive authority and were thus exempt from the FLSA requirements. Partly because
the store managers had no power to hire and fire staff, they reportedly often worked 60 to
70 hours per week doing a variety of nonmanagerial work activities such as operating cash
registers and manual labor such as stocking shelves, unloading trucks, and cleaning floors.

Conclusions and the Future
Family Dollar believes it can prosper in a limping U.S. economy and perform even better
in a strong economy. But with issues such as litigation, competition, increasing labor costs,
and efficiency issues in supply chain management and elsewhere, Family Dollar faces
challenges as it continues to grow toward 10,000 stores.
In April 2009 as the economic recession continued, Family Dollar’s Public Relations
Manager Josh Braverman said, “Thrift is in. Saving money is in. And it still will be even
after the economy recovers.” Although penny-pinching moms are important to Family
Dollar, the future is not a sure thing. Can Family Dollar perform well both in good
economic times and in bad economic times? To many business experts, it seems unreason-
able to be able to have it both ways.
As indicated in Exhibits 6 and 7, Family Dollar’s third-quarter (ending May 30,
2009) results were excellent. Compared to one year earlier (May 31, 2008), net sales