Dive Brief:
- Dollar Tree is investing in temperature controls across its distribution center network, CEO Rick Dreiling said during a Q2 earnings call.
- The temperature controls will improve operating performance and drive efficiency at the retailer’s facilities by “reducing cross-stocking expenses and increasing flexibility” to store various products, the CEO told analysts.
- Dollar Tree currently has temperature controls at four DCs, two of which were recently implemented, and expects to upgrade eight facilities by year end, Dreiling said. The remainder will be rolled out by the end of 2024.
Dive Insight:
Temperature control enables Dollar Tree to ship over-the-counter products directly to stores, according to a June 21 investor conference presentation by Chief Supply Chain Officer Mike Kindy. The investment also eliminates multiple touches, expensive and inefficient cross-docking, and the need to store and select OTC products in a designated area.
Dollar Tree has also been improving its store delivery process to optimize store in-stock and distribution service levels, according to the presentation. This includes using Rotacart for store deliveries.
“While still in its early days, we continue to make good progress on our Rotacart rollout,” Dreiling told analysts. “Beta testing on Rotacart deliveries is currently underway and we are on track for our DC in Matthews, North Carolina, to be Rotacart-enabled by the end of this year.”
As the retailer looks to optimize its distribution network, Dollar tree is building a combined Dollar Tree-Family Dollar warehouse in Florida, Dreiling told analysts during a Q1 earnings call.
“We had one in Utah and we actually converted it to Family Dollar only,” he said. “It’s one of those propositions that sounds easy, makes sense, but it tends to be a little more difficult to execute.”
Competitor Dollar General has also been bolstering supply chain capacity and recently opened its first dual distribution facility in Nebraska for fresh and frozen food offerings.
