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.