Of Discounts and Daffodils

June 10, 2020

By Morgan Strawn

Visual Generation/Shutterstock.com

Marketing Maestros is providing weekly coverage of how various brands are responding to the novel coronavirus outbreak and relevant resources from the ANA's Marketing Knowledge Center to help your brand do the same.

 

Dollar General Is Winning Retail in the Face COVID-19

The eruption of COVID-19 and the resultant quarantines have devastated most retailers and have even driven a number into bankruptcy. Storied brands such as J.C. Penney, J. Crew, and Neiman Marcus have already filed for Chapter 11, and more are expected to do so in the coming months.

In contrast to these unfortunate developments, Dollar General has been thriving — presumably because depressed economic circumstances have given people an appetite for the kind of budget buys that the discount retailer specializes in providing. The company reports that same-store sales growth through May 26th was up 22 percent versus a year ago and that its own brands were proving especially successful, particularly a new laundry line under its True Living brand.

Dollar General’s good fortune has come at the cost of some hardship to employees whose work thrusts them out of quarantine, but the company has made an effort to compensate and accommodate them. The retailer has awarded $60 million in bonuses to its frontline employees, adjusted benefits temporarily for those with a coronavirus diagnosis, donated $250,000 to the Dollar General Employee Assistance Foundation, and followed social distancing protocols with measures such as barriers at checkout, hand sanitizer, and the provision of masks and gloves for employees.

In addition, Dollar General has striven to support those in need by donating $2 million to Save the Children’s coronavirus response efforts across rural America. This contribution will assist the nonprofit in its efforts to educate children and feed them nutritious foods while schools are closed.

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Scotts Miracle-Gro Flourishes under Quarantine

Dollar General in many ways represents the exception to the rule governing the fate of retail at the moment. In most cases, the companies succeeding are ones with muscular e‑commerce arms — especially those selling products people have a high demand for in quarantine.

Consider Scotts Miracle-Gro. Many suburbanites confined to their homes have thrown themselves into raising plants and beautifying their yards. In the process, they have been using the company’s fertilizer and gardening and lawn care products. Another group of consumers who are lining the company’s pockets are those raising cannabis — a segment that, along with regular gardeners, is catered to by Scotts’ subsidiary, Hawthorne Gardening Co.

“Not that it’s a joking matter, but you’ve got to find levity where you can: What were people going to do when quarantine hit the whole country? They’re going to sit at home and smoke pot and garden,” said Hawthorne general manager Chris Hagedorn.

The company’s success has come in large part as a result of its e-commerce positioning. Through April, online sales through retailer websites and Amazon already had topped the 2019 total. Scotts is shipping directly from its factories, and some of its retail partners are using e-commerce for curbside pickup.

The digital triumph has proven a huge benefit to the bottom line. Sales for Scotts’ busiest quarter ending in March rose 16 percent to $1.38 billion, and that's in comparison to a strong performance during the same period last year. That figure reflects an 11 percent increase in its consumer gardening business and 60 percent growth in its horticultural supply unit.

Not that the entirety of the company’s success can be attributed to e-commerce. Scotts also reports that in-store sales at its four largest retailers were $190 million in the first week of May — the highest seven-day total in company history, breaking the previous week’s record of $150 million.

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