Focus on pharmacy, convenience trips will drive Fred's Super Dollar success going forward

MEMPHIS, Tenn. — Fred's Super Dollar is positioned well for the future with a mix that continues to skew heavier toward pharmacy and a front-end that satisfies the convenience trip — the one-need trip that online retailers have been unsuccessful fulfilling, Fred's chairman Michael Hayes told analysts on Tuesday.

 

"The industry changes that we have experienced in the pharmacy world has been both a plus and a minus," Hayes said, acknowledging the impact generic pricing has recently had on the business. "[Prescription acquisitions] will continue to grow and I think that we'll achieve ... 60-plus penetration of the pharmacies in the company," he said. 

 

Regarding the Internet, growth in online retailing has been expansive, suprising everyone in its ability to penetrate big-box retailing. "As a result of that they have a left out a trip that is going to be needed in the future and that is going to be the convenience trip — the trip that’s out there that is not being accomplished on the Internet," he said. 

 

With the renovations Fred's is instituting across its front-end, the dollar store/pharmacy hybrid is well positioned to grab that convenience trip."The new store is so much more attractive, the reviews that we received on the first five stores are wonderful," he said. "It's modern, it's fast, it allows the customer to get it and it builds the ability for us to do something that our competitors cannot do. We can give [our customers] a higher diversity of shopping behind I-need-it-now opportunities in the store."