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FINANCE

Dollar General beats Street; to open 1,000 stores and hike store managers pay

BY Marianne Wilson

Dollar General on Thursday reported better-than-expected fourth quarter sales and earnings and said it planned to raise compensation and increase training for store managers.

The discounter also said it plans to open approximately 1,000 stores and remodel or relocate 900 existing stores in fiscal 2017.

Dollar General’s net income rose to $414.2 million or $1.49 per share in the fourth quarter, from $376.2 million or $1.30 per share a year earlier. Analysts on average had expected earnings of $1.41 per share.

Net sales increased 13.7% to $6.0 billion in quarter.

Same-store sales increased 1.0% from the year-ago period, primarily due to an increase in average transaction amount, partially offset by a slight decline in traffic that moderated from the second and third quarters.

Same-store sales were driven by positive results in the consumables and home products categories, partially offset by negative results in the seasonal and apparel categories.

Dollar General said on Thursday it would hike compensation and provide more training for its store managers, a move that it hopes will improve service quality in stores over time but will pressure earnings this year.

Dollar General said its manager pay hike would put pressure on earning this year. It forecast earnings of $4.25 to $4.50 per share for the year ending February 2018, below the average analyst estimate of $4.39.

“Dollar General is well-positioned to serve our customers with value and convenience given our plans to open approximately 1,000 new stores in 2017,” said Todd Vasos, Dollar General’s CEO. “To strengthen our position for the long term, we are making significant investments, primarily in compensation and training for our store managers given the critical role this position plays in our customer experience, as well as strategic initiatives. While these investments are expected to put pressure on our 2017 earnings, we believe they will strengthen our market share position over time and are positive steps to further support sustainable growth for our shareholders over the long term.”

Dollar General’s full year 2016 net sales increased 7.9% to $22.0 billion. Same-store sales increased 0.9%. During 2016, the company opened 900 new stores and remodeled or relocated 906 stores.

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Online_egifting
Insights

The Science Behind Successful Online Gifting & What To Avoid To Protect Your Brand

BY CSA STAFF

People love to give gifts.

Gift giving is more than a simple act or gesture. It’s a big part of everyday life. In fact there is a lot of research showing that giving gifts give us more happiness than we expect. In addition, research in Behavioral Economics shows that giving a “good” gift strengthens social bonds by not only demonstrating that the recipient is loved, but also the gesture of getting something they truly want. The strengthening of a social bond is difficult to replicate, and results in strong, positive emotions for both the giver and the recipient, which can then extend to the gift’s merchant and brand.

But giving a good gift is often easier said than done. What if it’s the wrong size? Or color? Studies have found that this high risk can drive many to choose neutral gifts like flowers or wine, doing little to strengthen the bonds in a relationship. Some chose not to give at all.

Some others compromise with gift cards. Scientifically speaking, gift cards are too close in the spectrum to giving money, significantly reducing the excitement for both buyers and recipients and tarnishing the important social bond. And while gift cards make sense occasionally, studies show they do not strike the right balance of thoughtfulness. Most consider them too transactional: too little meaning, not enough attention and emotion.

Growth in e-commerce is driving online shoppers to demand that retailers also accommodate impulse and instant-purchase behavior — a main driver for online shopping — including enhancing and improving the experience of gifting. To this end, major retailers and brands like Macy’s, Saks Fifth Avenue, Bergdorf Goodman, Coach, and Neiman Marcus have adopted product e-gifting solutions. In fact, it's estimated that the product e-gifting category represents many billion in sales annually. Brick-and-mortar and e-commerce retailers alike are becoming aware of this significant, unrealized category as an incremental business driver, but some still have questions about its fundamentals.

As product e-gifting becomes reality, there’s a clear understanding that retailers need to accommodate a dedicated shopping service and check-out for buying products as gifts rather than a self-purchase.

After looking into product e-gifting, it was clear to me that we have to examine the benefits of e-gifting, not just as efficient exchange of gifts, but also as mechanisms to improve the relationship between the buyer and the recipient, as well as with retailers and brands offering the service.

This past February, I conducted several studies that compared and tested existing approaches to product e-gifting that evaluated how a dedicated, end-to-end gifting experience compares to an approach that relies on an existing check-out flow to understand and explore differences as to how consumers respond to the distinct experiences. These studies focused on core fundamental differences, intentionally omitting direct reference to the type of gifts, price levels, brand names, etc.

What I found was that while product e-gifting can be incredibly useful to both customers and retailers, if done incorrectly it can hurt the relationship between the buyer and the recipient and erode the customer-brand connection.

Below I offer several observations and data points that are important to take into account in order to deliver a successful e-gifting experience. These points strengthen the buyer-recipient social bond and minimize risk, while protecting the consumer-retailer relationship, and drive a successful gifting program.

Experience is key to success.

Buying and receiving gifts are very different than self-shopping. Presenting, or leveraging an existing check-out is too transactional, degrading the emotional gift receiving experience. To drive value described above, retailers should avoid requiring the gift recipient to “check-out” their own gift, which was rated ‘very dissimilar’ to traditional gifting, and resulted in experiences that were rated three times less delightful by consumers when compared to experiences that had a dedicated, end-to-end gifting experience.

Hide the price.

Not surprisingly, consumers were uncomfortable seeing the price when receiving an e-gift, with discomfort increasing for higher-priced gifts. Experiences that didn’t display the price were found nearly three times more delightful than gifts that displayed the price, directly correlating to more consumers’ being ‘highly likely to recommend to a friend.’

Accommodate price fluctuations.

Pricing of items being gifted can fluctuate between the time of purchase and redemption. That a buyer or recipient could be left holding the bag registered as a “high concern” with strong negative implications. Being asked to add money in order to accept the gift hurts the social bond between the buyer and recipient, as well as between the consumers and the merchant.

Forget about registering the gift recipient.

Many consumers in the study rated ‘concerned’ when a gift recipient needed an online account with the merchant to receive the gift, noting it would degrade the experience. Redeeming a gift without an account will foster good will, and make recipients more likely to return.

Streamline and keep it simple.

A streamlined and natural e-gifting experience was rated more than four times more preferable than a cumbersome experience. Implement fewer screens to ensure buyers don’t “give up” before completion of an e-gifting transaction.

As adoption of technology fuels product e-gifting, retailers must understand and recognize that the basic fundamentals of why and how we give still need to apply. Very different than gift cards, there are higher standards, higher social recognition, and higher expectations when consumers are buying and receiving thoughtful products as a gift.

Positive e-gifting experiences can act as a catalyst for more repeat purchases than even traditional shopping. Offering a true experience for consumers will enable retailers to benefit from additional revenue through an entirely new channel, and strengthen bonds with their customers. The best product e-gifting experiences needs to support the fundamentals of true gifting to strengthen social bonds between the giver and recipient and achieve the value and benefits that it holds. And these platforms have to take these elements into account.


Dan Ariely is a professor of psychology and behavioral economics at Duke University, TED speaker and the New York Times bestselling author of "Predictably Irrational."

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Mobile_wallet
POS/PAYMENTS

Survey: Mobile wallet adoption has flatlined

BY Deena M. Amato-McCoy

Mobile wallet usage in the United States remains small, and shows no signs of increasing anytime soon.

This was according to “PYMNTS/InfoScout Mobile Payment Adoption,” a new report from PYMNTS.com. The survey, which was conducted in March 2017 among more than 7,655 consumers, said less than one in 20 consumers who have one of the main mobile wallets (Apple Pay, Sam-sung Pay, and Android Pay) use it regularly.

The study also showed the percentage of people who have tried mobile wallets has flatlined. The only exception is Apple Pay, which has seen its usage go down for the first time. However, Apple Pay leads the pack when it comes to the number of consumers that have tried it at least once (22%), compared to Samsung Pay (15%), and Android Pay (less than 10%).

However, those who have installed Samsung Pay have used it at mer-chants that had supporting technology (4.5%). Apple Pay came in a close second at 4.0%, while Android Pay trailed behind at 1.1%.

One product garnering more attention is Walmart Pay. After eight months on the market, 3.3% of shoppers installed the app on their phone, com-pared to Apple Pay (available for almost three years) and Samsung and Android Pay (both on the market for almost two years), all of which have seen fairly flat usage for their entire availability, the study reported.

“So far, mobile wallets aren’t attracting much consumer interest,” Karen Webster, CEO of pymnts.com said. “The lesson, though, isn’t that wallets are dead. Rather, the providers and innovators really need to focus on features that will get consumers, and merchants, excited.”

What is to blame for the sluggish adoption among consumers? Shoppers reported they are happy with their current payment methods, such as plastic cards and cash. One bright spot for mobile wallets is that people are becoming less worried about security, according to the study.

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