Dollar General is an aggressive, competitor in the deep discount retail industry. Recent annual sales figures totaling $6.9 billion across 29 states (close to 7,000 stores) has placed the chain at the top of the dollar store category of discount retailers, surpassing chains Family Dollar, Fred’s and Dollar Tree. The company also competes aggressively with chains such as Wal-Mart, Kmart, CVS and Rite Aid. The store currently offers a product line of general merchandise that includes housewares, cleaning supplies, health and beauty aid, clothing, packaged foods, stationery, seasonal offerings and other household consumables. Unlike its competitors, Dollar General place new stores within the communities. Dollar General feels that filling the role of the “neighborhood store” is a big part of its success. The company has become known for rapidly opening stories and running each store at the lowest operating cost possible. It’s clear that Dollar General is the king of the discount retail market and not changing any time soon. However, within their success, there appears to be room for improvement as the company vies to remain the leader.
DOLLAR GENERAL’S IN GROWTH MODE
The low-budget Wal-Mart as we call it in Coldwater, Mississippi, Dollar General business strategy has afforded the company to grow at a faster rate than the larger retailers such as Wal-Mart, Kmart and Target. The company focuses on opening smaller, cheaper stories in rural areas in the neighborhood it operates earning it the name “the neighborhood store.” The company’s biggest advantage appears to be the small size and location of its stores. According to the book, the average store occupies 6,800 square feet of space. The company views leasing space as the most favorable financial practice. As a result, the company is filling the abyss as a result of smaller stores and “mom and pops” being forced out of business. I also believe that the company has an efficient supply chain management process in place. From a marketing standpoint, the company has positioned itself strongly within its customer’s eyes relative to quality and image. Further, the number of stores that the company has opened and continues to open will be virtually impossible for the larger retailers, as well as the smaller competitors, to match and/or even catch up with its growth. And as result of the number of stores the company operates, they will continue to have greater purchasing power and able to negotiate lower prices; thus, filling their promise to the customer for lower prices. The company has definitely found its niche.
Also, Dollar General decision to focus on an often neglected and overlooked market in the retail industry. Its target audiences include the low-to-lower middle income as well as fixed income customers. The focus on this group allows the company a fixed even-dollar pricing schedule with about one-third of all merchandise priced at $1 or lower and the maximum around $35. As a result, there growth has outpaced their competitors, which is evident by the company’s success. Further, the company’s choice to cater to its defined target audience allows for it to be selective in the placement of its stores. The fact that Dollar General focuses on consumable basic will guarantee them continued success. The items Dollar General is selling are items that people need to purchase on a regular basis.
Lastly, the company has developed a well-oiled machine when it comes to opening a new store. The process is a chain reaction of events that begins with a district or area manager making necessary decisions to execute the pertinent details needed from the construction to setting up the satellite links to getting the store ready for customer operation. This process has worked and will continue to work for the company, virtually taking about eight days to opening a new Dollar General.
DOLLAR GENERAL IMPROVEMENT ON SYSTEMS