Dollar General

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Dollar General Case Analysis

Dollar General (DG) has succeeded in becoming a prominent competitor in the extreme value retail market segment in the United States. Throughout the years, DG has executed key business initiatives that have led to major advantages. They have implemented a low cost business model that targets smaller communities, which in turn allows for lower prices on products that consumers consider essential. By using the low cost business model, DG has been able to sustain a big advantage over potential threats by offering a more convenient shopping experience.

Using the small store concept has proven to be a valuable asset but has also produced a major trade off concerning inventory storage. DG continues to maintain disadvantages concerning replenishing highly demanded SKU’s and product mix pertaining to noncore merchandise. DG’s major competitor in the extreme value retail market is Family Dollar. Both companies continue to offer small stores and convenient shopping experiences. Wal-Mart serves as a potential threat based on its unique bargaining position that it has developed with its suppliers. Also, with the implementation of Wal-Mart Neighborhood Markets, the larger competitor is able to compete in a smaller, more convenient shopping environment as opposed to its usual niche of supercenters. Potential competitors that could offer a convenient shopping experience are large convenience stores such as RaceTrac. These larger convenient stores could become a valid competitor if they are able to negotiate comparable prices with their suppliers that would allow them to match DG prices.

DG incurred financial losses in 2006 by closing down non-profitable stores and remodeling outdated locations. It is very critical that every business decision that is made takes into consideration financial cost, company image and resource constraints. DG is faced with several options for future growth opportunities beyond 2007. Outlined below is a strategy...
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