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A worker enters Duluth’s new Family Dollar store at 326 E. Central Entrance last week where store setup was underway and store signage hadn’t yet been installed. Store officials hope to open Thursday. (Steve Kuchera / skuchera@duluthnews.com)

Family Dollar nearly ready for business on Duluth's Central Entrance

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After sitting vacant for several years, First Photo’s former location on Central Entrance has gotten a complete makeover.

The result is Family Dollar’s first Duluth store, scheduled to open Thursday.

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“We’re really excited to bring the community a brand-new Family Dollar store,” said Cliff Cermak, a community affairs specialist for Family Dollar.

As construction was wrapping up on the standalone building a week ago, the 10-day process to set up shelving and merchandise got underway by the new employees.

The 10,500-square-foot discount store at 326 E. Central Entrance will offer a combination of name and private brands, including refrigerated, frozen and other groceries, health and beauty items, household products, clothing and pet supplies.

The new store will be open seven days a week with a staff of eight to 10 employees, said Bryn Winburn, a spokeswoman for the North Carolina-based chain.

“Our real estate people use sophisticated software to determine where to open stores,” she said. “They obviously felt it would be a good market for us.”

They also apparently see a good market in Gary-New Duluth, where an Illinois-based contractor is building another store for Family Dollar. With the slab in, the steel framework is going up at the corner of Commonwealth Avenue and Carterette Street, next to Gary Builders Supply.

The two Family Dollar Stores would double the number of dollar discount stores in Duluth. Competitor Dollar Tree has stores in West Duluth and Burning Tree Plaza. Industry leader Dollar General also may open a store in Gary-New Duluth next year.

Meanwhile, the A Dollar at Miller Hill Mall closed in June. It was a temporary tenant whose lease was up and whose space was needed, said Machelle Kendrick, a mall spokeswoman.

Some dollar stores, like Family Dollar and Dollar General, aren’t true dollar stores, but discount stores offering substantial savings on household items and food, especially staples. A recent price survey by Consumer Reports’ ShopSmart magazine found dollar stores had the cheapest prices for eggs and whole wheat bread, coming in lower than Wal-Mart, Target, Walgreens and supermarkets.

Openings surpass closings

The opening of the Family Dollar store in Duluth comes as the chain’s profits reportedly plummeted last quarter. It comes as rivals Dollar Tree and Dollar General consider moves to buy the chain. And it comes after Family Dollar announced it was closing 370 underperforming stores by the end of its fiscal year.

But Winburn, Family Dollar’s public relations manager, says the chain continues to grow. It will open 525 stores this year, which is a little more than most years, she said.

“It’s not unusual for a company to close underperforming stores,” she said. “With more than 8,000 stores across the country, 370 store closings is a pretty small percentage.”

The closings of dollar stores don’t mean a particular chain or the sector is on the decline, said industry observer Thomas Harpointner, CEO of AIS Media in Atlanta.

“The dollar stores were very strong during the recession,” he said. “And now it’s very difficult for people to shrug off the memory of the recession. Those who had to cut costs developed those habits. They won’t shake them overnight.

“Store openings and closings are often a shift to more promising markets,” said Harpointner, who works with retailers to help them optimize performance. “They’re positioning themselves in lower-income areas, relocating stores where they are more likely to reach their target. A lot of them are moving. It may initially look like a store is closing, but it’s really a strategy move.”

Next up: Gary-New Duluth

Dollar General — North America’s largest discount retailer with more than 11,000 stores  — has been looking to open a store early next year in Duluth’s Gary-New Duluth neighborhood, where there is a retail void.

“We try to serve a 3- to 5-mile radius, about a 10-minute drive,” said Jaclyn Dees, a spokeswoman for the Tennessee-based industry giant.

The sale of city-owned land for $50,000 to a developer to build the store, then lease it to Dollar General, was authorized in April. Construction of the store — on Commonwealth Avenue between Bowser and Stowe streets — has not begun.

It’s not a done deal yet, Dees said last week.

“We’re in due diligence; we’re looking at the site, but it’s not guaranteed to come in,” she said.

The location, however, is just two blocks south of the Family Dollar store being built. And whether the community can support two dollar stores and whether both companies will move forward with their store plans is unclear.

If Dollar General reaches an agreement with the developer, Imperial Development Co. of Missouri, by its February 2015 deadline, Dollar General can move forward with opening the store. At that point, it can come together fairly quickly, Dees said.

According to Imperial’s agreement with Duluth Economic Development Authority, if the land transfer doesn’t happen by March 31, the deal will become null and void.

Like the new Duluth Family Dollar stores, the General Dollar store would be a standalone store.

Harpointner said dollar stores are opting for standalones more these days, rather than strip malls and other shopping malls.

“When customers walk into free-standing dollar stores, they are more intent on making purchases,” he said. “It attracts more serious buyers than casual shoppers. There’s more sales, higher profits. When you have a free-standing store, you are the center of attention. It’s primo brand awareness.”

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