Family Dollar uses SAS® Merchandise Planning to accelerate companywide transformation

In a room packed with fellow retailers at the National Retail Federation (NRF) 98th Annual Convention and EXPO in New York last month, Family Dollar Vice President of Merchandise Operations, Scott Zucker, took center stage to share practical advice and key learnings from the company’s multiyear technology initiative, “Project Accelerate.” In the session, Zucker described how rapid growth drove the vision for the project and how SAS has been a strategic partner throughout.

Family Dollar was in the spotlight at NRF for the project’s positive results.  Despite economic pressures, Family Dollar was one of the few retailers to post comparable-store sales increases over the 2008 holiday season, a trend that continued in the company’s first-quarter earnings report. 

“As more families face financial challenges in this environment, they are relying on Family Dollar for more of their everyday needs,” said Howard R. Levine, Chairman and Chief Executive Officer.

From humble beginnings
Family Dollar has experienced rapid growth since its first store opened in 1959 in Charlotte, NC. Leon Levin, Family Dollar founder, was in his early twenties when he decided to open a low-overhead, self-service retail store. Because he had grown up in his family's retail business, Levin understood value, quality and customer satisfaction. From the start, he had a vision of what Family Dollar could be and how it should operate. The concept was a simple one: "The customers are the boss, and you need to keep them happy."

Rapid growth drives the need for a new platform
By 1974, Family Dollar had grown into a chain of 1,000 stores. In 1982, the company was at 2,000 stores. Today, Family Dollar has more than 6,600 stores across 44 states with an estimated $7 billion in revenues.

Growth of this magnitude obviously presents challenges. As all retailers know, what seems simple to customers is complex behind the scenes. 

The process of moving merchandise from the manufacturer through the supply chain and ultimately to the right stores at the right time in the right quantities is not simple; a tightly integrated merchandise planning process and toolset is needed to get each pack of gum delivered to the correct store. Furthermore, how was management to position Family Dollar for future growth and streamline efficiencies, while remaining true to its founding philosophy of delighting the customer? 

To answer these questions, Family Dollar launched Project Accelerate -- a three-year strategic initiative aimed at building new merchandising capabilites that would provide Family Dollar with a robust and flexible operating platform to support the company’s future growth. 

SAS was chosen as the merchandise intelligence platform. By adding SAS, said Zucker, “Family Dollar’s merchandising organization will quickly create integrated merchandise and financial plans we can share and adjust collaboratively in almost real time.”

Key lessons learned
Zucker shared insights from managing the transformation – looking at the critical elements of people, processes and technology.

From its inception, Project Accelerate had a clear vision – to develop tailored, relevant and balanced merchandise assortments that drive significant improvements in sales, margin and inventory productivity. That vision was coupled with a strong governance model across four key functions – merchandising, supply chain, information technology, and human resources.

As the project developed new processes, new tools, and new organizational responsibilities, managing the cultural change was critical. Every company embarking on a project like this should identify, address and plan for cultural change at the beginning. Moving a ship with many people requires excitement, understanding, training and process improvement. 

Building a diverse, capable and collaborative team was the highest priority.  The Project leadership interviewed almost every person on the basis of experience and more importantly, cultural fit. A combination of employees and multiple consulting firms combined to make up the final project team. Since collaboration was one of the key design principles of the team, any outside consultant who did not play “team ball” did not remain on the team.

From a technology perspective, the vendor selection process was critical. Zucker shared with the audience how SAS was selected and has evolved into a holistic strategic partner with Family Dollar, contributing equally on both the business and IT side. For example, SAS helped design in-season management processes to support merchandise planning, and a store clustering processes to support assortment planning.  In addition,  the company worked closely with Family Dollar to deploy the integrated merchandise planning suite on a Windows 64-bit platform – which was a fraction of the cost of other hardware options Family Dollar had considered.

As a stable, conservative North Carolina company that shared many of the same values and ideals, Family Dollar’s decision to partner with SAS was as much about the company’s culture as it was about the company’s software.

By delivering tailored and relevant assortments that drive sales, margin and inventory productivity improvements, Family Dollar’s new integrated merchandise planning suite will position the company for long-term growth and profitability.  Additionally, the SAS solution will extend and enhance Family Dollar’s heritage of providing customers with a simple, and convenient shopping experience.

Family Dollar was one of the few retailers to post comparable-store sales increases over the 2008 holiday season.