Dollar General ppt

Topics: Variety store, Retailing, Wal-Mart Pages: 12 (898 words) Published: April 23, 2015
3/12/15

Dollar General
Jacky Akpan
Taha Kermalli
Allison Schumacher
Anlin Wang

1

Dollar General, 2007
●  Quality consumer goods in select categories
●  Focused inventory on fastest-turning SKU’s
●  Targeted demographics ignored by Walmart
Store

Dollar General

Walmart

Square Feet

6,900

100,000

SKU’s

4,900

75,000+

~20,000 or less

50,000+

Surrounding Populations

2

1

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Pricing and Brands
●  30% of products priced at $1 or less
●  Majority of products under $10
Brands
Name Brands (30%)

Private- Label Brands (12%)

3

Industry History: Five-and-Dime Model
●  Pioneered by Woolworth’s, founded in 1878
●  Merchandise was offered at two price points: either a nickel or a dime
o  Due to inflation, they later became known as variety stores

●  Large discount stores, including Kmart and Target, had great success in the 1960’s and 1970’s
●  Dollar store segment began to grow significantly again in the 1990’s when the industry broke away from its fiveand-dime roots. 4

2

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Dollar Store Segment: Subcategories
1.  Single-price-point retailers: every item is $1 or less ●  Dollar Tree, 99 Cents Only
1.  Closeout retailers: overstock, discontinued, surplus, and/or distressed merchandise
●  Big Lots, Tuesday Morning
1.  Limited assortment grocery retailers: small selection of (mainly privatelabel) grocery items ●  Save-A-Lot, Aldi

5

Dollar Store Segment: Subcategories
4. Extreme-value retailers: offer everyday low prices in a
small-box format
●  Focused assortment of goods
●  Nationally branded products
●  Compete on convenience and price
●  Many $1 items, others up to $10 or $15
o  Dollar General, Family Dollar

6

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Extreme-Value Retail: Porter’s Analysis
Threat of Potential Entrants: High
●  Low barriers to entry

Bargaining Power of
Suppliers: Medium
●  Suppliers sell to
many merchants

Rivalry Between Competitors: Medium
●  Dollar General
●  Family Dollar
●  Dollar Tree*
●  Wal-Mart*

Bargaining Power of Buyers: High
●  No switching costs
●  Countless brands and
varieties

Threat of Substitutes: Medium
●  Access to grocery and specialty
stores
●  Accepted payment methods

7

Business Level Strategy
●  Focused cost leadership strategy
o 
o 
o 
o 

Focused assortment of basic consumable
merchandise
Fairly priced (everyday low prices)
Convenient, small store format
Serves primarily low, middle, and fixed-income
families

8

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Value Chain Activities

9

Resource Based View
Resources/Capabilities

Valuable

Rare

Costly to
Imitate

Nonsubstitut
ability

Store locations

Y

N

N

N

Convenience

Y

N

N

N

Company culture

Y

N

N

N

Economies of scale

Y

N

N

N

Pricing strategy

Y

N

N

N

Supply chain management

Y

N

N

N

Human resources

Y

N

N

N

Technology

Y

N

N

N

Competitive
Consequences
Competitive parity

10

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Key Financial Ratios

Dollar General CAGR - 9%
Industry CAGR - 10%

11

Key Financial Ratios

12

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Declining Sales Growth

13

Dollar General Improvements
●  Project Alpha
o 
o 
o 

close low-potential stores
re-model/re-locate
pack-away policy

14

7

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Improvements by Category
●  Technology
o 
o 

Inventory-replenishment system
Accept debit/credit cards

●  Store Management
●  Merchandising
o 
o 

Focus on shelf profitability
Coolers
15

Geographic Expansion in U.S
●  Increased retail outlets from 35,000 in 2006 to more
than 40,000 retail outlets in 2008
●  In 2006, expected to open 800 stores, but only opened 537 stores
●  Move westward into California, Nevada, Oregon, etc.
●  (Maybe include image on page 21)

16

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Issues and Problems
● 
● 
● 
● 

Growth sustainability
Merchandise selection
Business...
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