Two big discount retailers eye Sacramento region | Sacramento Business Journal

Two big discount retailers eye Sacramento region | Sacramento Business Journal

Two big discount retailers eye Sacramento region
Dollar chains see lasting demand for bargains
Premium content from Sacramento Business Journal - by Kelly Johnson, Staff writer
Date: Friday, July 8, 2011, 3:00am PDT - Last Modified: Friday, July 8, 2011, 3:00am PDT
Related: Retailing & Restaurants
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Courtesy of Dollar General Corp.
A Dollar General store. The nation’s two largest dollar-store chains are kicking the tires in Sacramento as part of an expansion to California.

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Top of the List: Commercial real estate
The nation’s two largest dollar-store chains are kicking the tires in Sacramento as part of an expansion to California, real estate sources say.
Dollar General Corp. , the industry leader, has made offers for many local sites, said Jared Dong, a retail broker with brokerage Terranomics .
Family Dollar Stores Inc. , the second-largest player in the sector, doesn’t appear to be as far along and is generating less chatter among Sacramento real estate professionals.
Neither company would provide specific information regarding their expansions.
Tennessee-based Dollar General, with more than 9,500 stores, announced in May that it would open its first California stores in 2012. North Carolina-based Family Dollar, with more than 6,900 stores, announced last fall that it would expand to the West Coast. Both retailers have posted job openings in Southern California.
“We are excited about our entry to California,” Dollar General spokeswoman Tawn Earnest wrote in an email. “Until now, the farthest west we have a presence is Arizona. We have plans to build stores in Vegas this year. We have historically grown from our base in the Southeast, where our company has its roots, farther north and farther west. Our openings in California will create a coast-to-coast presence for the first time.”
Family Dollar spokesman Josh Braverman was even less specific. “We pride ourselves on being a neighborhood store that strives to meet the needs of the communities we serve,” he wrote in an email. “We sell first-run name brands in easy-to-shop neighborhood locations.”
Seeking challenged markets

Garrick Brown, research director at brokerage Terranomics, estimates the Sacramento region could support at least 10 to 15 Dollar General stores. “I’d be very surprised if they’d come into the market with anything less than 10,” he added.
Dong received one offer for retail space from Dollar General a few months ago. He’s heard Dollar General has made about 60 offers in the region, for anything from 10,000 to 30,000 square feet.
The retailer’s average store size is 7,200 square feet.
“Economically challenged marketplaces have been very good to them,” Brown said of Dollar General. And Sacramento is among the most challenged metro areas in the country in terms of unemployment, he noted.
Both Dollar General and Family Dollar want to expand to the Golden State now, real estate sources say, because they can pick up store sites at bargain basement prices — 40 percent to half off the peak in some Sacramento locations. The retailers also are betting that consumers remain thrifty even after the economy improves.
“Everybody’s shopping down,” Dong said.
For owners and managers of retail space, it’s encouraging that two of the country’s largest retailers plan to expand. But their arrival would create more competition for the region’s existing dollar store operators and deep discounters, including national chain Dollar Tree Inc., a smaller chain called 99 Cents Only Stores (NYSE: NDN) and local operator Wise Buys Liquidators.
Competitors aren’t alarmed

Is there room for all these players?
“I don’t see why not,” said Wise Buys’ founder Gary Cino, whose company has two stores. “Thrifty is in. I believe it will continue.”
Cino said he doesn’t fear the dollar stores. “We would welcome Family Dollar and Dollar General,” Cino said. It’s “encouraging to hear that they are finally making a move westward.”
Cino’s stores — at about 40,000 square feet — are much larger than those of the two big chains, and he focuses on merchandise that sells for $9.98. He’s negotiating on space for a third store he’d like to open this year.
Cino had a chain called 98 Cents Clearance Centers, which he sold to Dollar Tree in 1998.
Virginia-based Dollar Tree (Nasdaq: DLTR) is the sector’s third-largest operator, with more than 4,100 stores, including 31 locally. Dollar Tree is adding two stores in Sacramento — one at Freeport Boulevard and Potrero Way and another at Howe Avenue and Wyda Way.
Dong, who with his dad, Bob, represents Dollar Tree locally, said the retailer is “working on other sites,” but doesn’t have a specific expansion goal in mind.
Dollar General and Family Dollar, which dedicate considerable space to food, also would further crowd an already jam-packed grocery sector. In addition to traditional supermarkets, the cast of characters includes Target and Wal-Mart, convenience and drug stores, and specialty shops such as Sprouts Farmers Market, Sunflower Farmers Market and Henry’s Farmers Market.
The July issue of the National Retail Federation ’s Stores magazine ranked Dollar General as the nation’s 28th largest retailer. Family Dollar was No. 48, and Dollar Tree came in at No. 62.
Dollar General Corp.

Headquarters: Goodlettsville, Tenn.
Ticker: NYSE: DG
First store: 1955
Fiscal 2010 net sales: $13.04 billion, up from $11.80 billion
Store count: More than 9,500 stores in 35 states
Fiscal 2010 store growth: Opened 600 stores, closed 56
Fiscal 2011 planned store growth: 625
Highlight: Fiscal 2010 was 21st consecutive year of same-store sales growth
Factoid: Most items priced below $10, with 24 percent selling for $1 or less.
Average sales per square foot: $201 in 2010
Average store size: 7,200 square feet
Web: dg.com
Family Dollar Stores Inc.

Headquarters: Matthews, N.C.
Ticker: NYSE: FDO
First store: 1959
Fiscal 2010 net sales: $7.87 billion, up from $7.4 billion
Store count: More than 6,900 stores in 44 states
2010 store growth: Opened 200 stores, closed 70
Fiscal 2011 planned store growth: Open 300 stores
Factoid: Most items priced at $10 or less, with many at $1 or less.
Fiscal 2010 average transaction: $9.91
Average store size: 7,500 to 9,500 square feet
Web: familydollar.com