Fred’s Small Boxes Keep Growing

The Memphis, Tennessee-based retail chain, Fred’s, is using its small box (typically around 16,000 square feet) discount store format to ring up impressive sales and profit growth. According to the company, net income increased 73% in the second quarter of this fiscal year compared to 2001. The company, according to the Memphis Business Journal, “has seen eight consecutive months of double-digit sales growth at comparable stores.”

The chain expects to have approximately 440 stores in operation throughout the Southeast by the end of the year. Fred’s has distinguished itself from dollar store competitors largely on the strength of a strong pharmacy department. Chains such as Dollar General and Family Dollar do not operate pharmacies.

Moderator’s Comment: What makes Fred’s successful?
Are there other retailers that you see successfully filling a niche left open
by bigger competition in a similar fashion to Fred’s?

Fred’s has found a niche in between dollar stores and
the mass merchandisers and it is taking it to the bank. The company’s growth
has been organic and its balance sheet and lack of debt make it a good choice
for investors. Strong management and attention to operations continues to ring
out costs while sales keep growing. IOHO, Fred’s has staying power.
[George
Anderson – Moderator]

• Fred’s
  model helping distance the company from competitors – Memphis Business
  Journal