A New Niche in Retail?

Fred's is having some success filling a niche between dollar stores and Wal-Mart.

Fred's prices are also more mixed than those at typical dollar stores. Some merchandise costs more than $100. Its prices are more comparable to the big-box discounters.

"We try to stay with Wal-Mart," Hayes said. "We realize that Wal-Mart is King Kong."

Although customers tend to shop at Fred's more often than they do at Wal-Mart, they don't spend as much money.

The reason: Fred's stores are in strip centers and in freestanding locations closer to customers' homes. They're a lot easier to get into and out of than big-box stores — with their packed parking lots, massive square footage and long lines — so customers are more likely to visit Fred's for a small purchase.

Wal-Mart is an innovative company, and I know they experiment with different types of stores and setups. If Fred's proves successful, my guess is that Wal-Mart will open a similar type of store to compete.

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