Family Dollar Turns to AI Platform to Localize Product Assortment
Dollar Tree’s Family Dollar has chosen customer data science company Dunnhumby to power a new category management and merchandising platform for its entire network of U.S. stores as the chain works to improve the in-store shopper experience and its value proposition.
The move helps Family Dollar's merchandising and data analytics teams localize its product assortment and make more customer-centric decisions, in collaboration with its CPG partners, according to a media release. The goal is to enhance the shopping experience, drive engagement with the discount chain’s 66 million shoppers and increase in-store sales using Dunnhumby’s artificial intelligence and consumer insights.
Family Dollar's new platform leverages two key tools:
- Dunnhumby Assortment: an AI-powered solution that launched in July and employs predictive analytics to quantify which products should be selected for each store, before forecasting the impact of assortment changes across each location.
- Dunnhumby Shop: a web-based AI-powered data tool designed to deliver comprehensive aggregated insights about shopper behavior and highlight the latest category trends.
"With our new category and merchandising platform powered by Dunnhumby, we can tailor and fine tune our assortments to local purchasing preferences, to ensure we provide our customers with the products they need at each of our stores," Larry Gatta, chief merchandising officer, Family Dollar, said in the release.
"The entire Dunnhumby team is honored to be selected by Family Dollar, after a competitive review, as their strategic partner for category management and merchandising," added Matt O'Grady, president of the Americas, Dunnhumby. "In today's hyper-competitive retail environment, Family Dollar recognizes that putting their customers first is crucial for growth and customer retention."
Deeper Dive
The move is one of many by Family Dollar and its parent company to enhance the in-store experience and improve sales among its low-income shopper base as consumers take a break from discretionary spending. Feeling the pinch, Dollar Tree cut its full-year consolidated net sales outlook earlier this month.
Additionally, earlier this year, Family Dollar revealed it will close almost 1,000 of its roughly 8,000 stores over the next few years due to underperformance.
In the meantime, Dollar Tree has been aggressively renovating the remaining Family Dollar stores, with an emphasis on expanding food and beverage options by adding more coolers and freezers and growing its private-label selections. The retailer is also trying to improve store cleanliness, reduce out-of-stocks and generally improve the banner's value proposition.
Additionally, in May, Dollar Tree acquired designation rights for 170 leases of 99 Cents Only Stores across Arizona, California, Nevada and Texas to accelerate its growth strategy. The shuttered 99 Cents locations will reopen under the Dollar Tree brand beginning this fall.