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VALUE TENANTS: Climbing to the top

Retailers offering more for less are becoming supremely popular tenants. Current trends withstanding, Americans still want a big bang for their buck. How else can you explain the increasing popularity of dollar stores — even among those capable of spending much more? The truth is, these retail concepts appeal across many demographic and income levels. Some value stores are among the top companies in the country. You can find them everywhere from urban malls to suburban neighborhood centers as they continue to expand and prosper. In the following pages five such value stores — Great Clips, Save-A-Lot, 99 Cents Only, Dollar Tree, One Price Clothing — share stories of success.

Chesapeake, Va.-based Dollar Tree Stores, Inc. has consistently been a top performer in the value niche with $1.68 billion in revenues last year — up from $1.35 billion in 1999.

The company also proved its resilience by surviving a disappointing fourth quarter in 2000. Its stock price dropped 44% in December after the company announced lower than expected holiday sales. Despite falling $30 million below sales expectations, the company still managed to hit its original 25%-26% sales hike prediction. Since that time, stock prices have been gaining ground.

“December was a disappointing month,” says Bob Gurnee, vice president, real estate. “Traffic was off a bit for the Christmas season, but we experienced that along with the rest of the country's retailers. Though we tend to be less affected than some retailers, because of our value nature, we can still be affected nonetheless,” says Gurnee.

Dollar Tree customers tend to be middle-income females. These are the same shoppers who might frequent Wal-Mart, Kmart or Target Stores. In fact, Dollar Tree generally looks for locations anchored by one of these retailers. Typically, the average customer will spend a little more than $6 in the company's smaller stores and little more than $8 in the larger ones.

“We tend to cater to the middle- or upper-middle income as opposed to lower-middle income,” adds Gurnee. “Although we really do cross all the spectrums of the middle income and occasionally cross over into the upper-income areas.”

Dollar Tree has built a big business out of being a traditional five-and-dime. “When a customer comes into the store they know they are going to get a value for the dollar,” explains Gurnee. “Typically the reaction you get from the customer is ‘Wow, I can't believe you sell this for a dollar.’”

Dollar Tree stores have 1,729 locations in 36 states from coast to coast, primarily in strip centers. In the past year the company has opened 233 new stores, expanded 98, closed 11, entered three new states and merged with Philadelphia's Dollar Express. Between 260 and 275 new stores are slated to open this year. With 40 already open, they are well on their way to reaching that goal.

“We are building bigger stores today than we were several years ago,” says Gurnee. “We're kind of doing a two-concept approach. Our small stores are in the 5,000- to 6,000-sq.-ft. range and our larger stores are in the 9,000- to 12,000-sq.-ft. range.”

Dollar Tree's success began in 1986, the year it was founded. Since then, it has been named to Forbes' Platinum List of America's 400 Best Big Companies for the second year in a row. It also landed on Fortune's Top 100 Fastest Growing Companies in 1998 and has been in the upper ranks of the American Express Top Performing Retailers list since 1998.

Contact: Bob Gurnee, vice president for real estate, Dollar Tree Stores, Inc., 500 Volvo Parkway, Chesapeake, Va. 23320, 757.321.5000.

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