Did you know that, first few stores of Fred's used to be in towns with population of 15000 or less, being an only alternative to a convenience store?
Brothers Paul, Victor, and Charles Baddour opened a dry-goods store named Good Luck in Coldwater Mississipi in 1947.
Fred's provided a neighbourhood discount store offering everyday essentials—groceries, over-the-counter pharmaceuticals, household goods—at competitive prices.
They focussed on serving rural and small-town America, emphasising convenience and personable service over flashy merchandising.
Fred’s early success hinged on capturing underserved rural markets, delivering basic goods at fair prices, and forging strong community ties.
The brothers wanted to create a vision about Fred's that would scream “Your friendly local discount store”. A place where families could buy daily necessities and small luxuries under one roof, reducing trips to larger, distant shopping centers.
By aiming to be a localised discount resource, Fred’s initially found success in markets overlooked by larger competitors, leaning heavily into small-town hospitality and a wide selection of daily essentials.
Unique Value Proposition:
Local-Centric Approach: Strategically placed stores in small towns or low-traffic suburbs, sidestepping the intense competition found in bigger cities.
Broad Product Range: Sold everything from snacks and toiletries to limited apparel and home décor, ensuring one-stop convenience.
Cost-Efficient Pricing: Competitively priced items close to or below rival chains, helping the brand gain loyalty among budget-sensitive consumers.
Critical Milestones:
By 1970s, Grew steadily, surpassing 100 store locations. they also started integrating small pharmacies and health sections, driving foot traffic from families seeking quick, comprehensive shopping.
Towards the end of 1990s: The brand scaled to 400+ stores, becoming a staple discount chain in multiple Southeastern states, by this time they introduced private-label offerings to boost margins and brand loyalty.
2008 and post that was a challenge: Sales growth, slowed down as shoppers turned to emerging dollar store chains (Dollar General, Dollar Tree) with larger footprints and sharper.
Did you know that Fred's stores used to have an informal “locals-only” perk, they kept a small stash of clearance or heavily discounted items in a back storeroom, only for the most loyal and old customers?
Fred's store transition from Baddour's Bargain Center to Fred's Store in Coldwater Mississipi, Image courtesy:America Fulton and FOX13
Triggers for Slowdown:
Rivalry with Dollar General & Dollar Tree: Competitors outsmarted Fred’s on cost savings, store modernisation, and distribution systems.
Underdeveloped E-commerce Strategy: As online retail soared, Fred’s did not invest heavily in e-commerce or omnichannel solutions, remaining reliant on foot traffic.
Healthcare Regulatory Changes: Stricter reimbursements and complex insurance frameworks lowered margins in the pharmacy sector.
Uncoordinated Store Rollouts: Fred's expanded footprints but failed to standardize store quality and product assortment, causing inconsistent experiences.
Failed Walgreens Deal: At one stage, Fred’s aimed to acquire certain Rite Aid stores as part of a Walgreens–Rite Aid merger remedy, but regulatory hurdles halted the plan.
Bankruptcy
Even before the formal bankruptcy filing, Fred’s announced multiple rounds of store closures to cut costs and liquidate underperforming locations.
When Fred’s financial viability came into question and it failed to meet listing requirements, the retailer’s shares were delisted from NASDAQ.
In an effort to raise funds and satisfy creditors, Fred’s engaged in rapid inventory clearance and sold off certain real estate holdings, during Chapter 11 filing.
5 Ways to Avoid losing 85% Business of your business like Fred's
Don't be stuck in a Time Loop: Fred’s relied on outdated in-store models and missed the e-commerce wave. The best plan of action would be to pursue an omnichannel approach; invest early in technology that aligns with changing consumer behaviours.
Drill Deeper on your Strength: Fred’s expanded its footprints and pharmacy operations but never matched the depth of service or pricing advantage that Dollar General or Walmart had. A new brand should ideally define and protect its unique selling proposition, ensuring expansions are aligned with that expertise.
Invest heavily in Ops excellence: Frequent leadership changes and reactive cost-cutting can hamper innovation and consistent execution, just like it destroyed Fred's.
Don't turn a blind eye: Fred's admittedlylagged in adjusting to lower pharmacy margins, leading to spiralling store traffic decline. As a B2C business, you need to monitor external changes vigilantly, pivot promptly, and reinvest where returns remain viable.
Always be Pragmatic: Banking on the failed Walgreens–Rite Aid store deal wasted precious capital and planning cycles for Fred's. As a new entrant, businesses need to avoid high-stakes gambles (like a high profile acquisition) without contingency plans.
Subscribe to Beyond Newsletter
Subscribe to receive the latest Newsletter right to your inbox every week.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Join professionals going Beyond on our Weekly news brief.
Get access to growth hacks, expert interviews, and evidence-backed advice every week, Exclusive Downloadable Templates and Data Bases.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.