CHARLOTTE, N.C. (AP) — Family Dollar Stores Inc. plans to offermore groceries in its stores and begin accepting food stamps, amove aimed at making the North Carolina-based discount chain alower-priced competitor to convenience stores.

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Through adding more perishable food to the traditional dollarstore product mix, Avondale Partners analyst Patrick McKeever saidFriday the strategy may grab customers who are looking for quickshopping stops between larger grocery trips.

That convenience is a way to set Family Dollar apart from “bigbox” stores like Wal-Mart, which also compete for low-incomecustomers, McKeever said.

“A consumer goes to Wal-Mart to buy food in a stocking-up trip,”McKeever said. “They are not going there to just buy milk, a bag ofpotato chips and orange juice.”

Howard Levine, Family Dollar’s chief executive, said the idea isto offer low-cost items in a convenient shopping environment.

“We want to create a shopping environment that allows ourcustomers easy access, where they can park right in front of thestore and get in and out, yet still enjoy a competitive pricingenvironment,” he told The Charlotte Observer.

In order to accept food stamps, Family Dollar must sell milk.That means refrigerated cooler cases must be installed — somethingFamily Dollar has done in 3,800 of its stores so far.

“Extending the product mix with a limited assortment ofrefrigerated goods and dairy items should drive incremental salesvolume for the dollar store segment,” said Edward Jones retailanalyst Stephanie Hoff in a research note.

In fiscal 2007, which began late last month, the company says itwill increase its food assortment in 1,300 stores and accept foodstamps in 750 stores. It will also install coolers for perishablegoods at an additional 1,000 stores.

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The addition of food stamps should further boost food salesbecause many of the company’s customers can afford to buy groceriesonly by using food cards, Family Dollar spokeswoman Kiley Rawlinssaid.



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