Get Ready For A Big Revamp At Your Local Family Dollar

Dollar stores are killing it. Industry leader Dollar General is opening hundreds of new stores for the fourth year in a row, and it now has around 30 percent more locations than top competitor Family Dollar.

Family Dollar knows it can't win in a direct battle with Dollar General in its current state, so it's firing up a bold plan to revamp its business and reposition itself.

It wants to grab share from a variety of sources: grocery, convenience, drug and mass retail stores.

Here's what it's going to do, according to a report from Citi:

Invest in new categories — Family Dollar is rolling out tobacco products to around 5,000 of its stores nationwide. Beer is being tested as well, along with additional impulse items at the register.

Expand product assortment — In the next couple months, Family Dollar is adding a variety of Pepsi products. The Pepsi brand matches well with the retailer's core customer base, and the move will likely grab some share from grocers.

Renovate its stores — 1,300 Family Dollar stores have already been renovated to a new and improved format, featuring a new fa ç ade, signage and higher capacity. It plans to have 1,500 more stores remodeled by the end of the year.

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