How does Dollar General stay in business?

In My Humble Opinion
21

By buying stuff that costs (on average) less than $1

Okay, by buying stuff that costs (on average) less than they pay for it.

Anyways Dollar General is a public company, so we can just take a look at their actual numbers to see what they have to say, as of 1/31/16:
They brought in 20 billion dollars
The items they sold cost 14 billions dollars
For a gross profit of 6 billion dollars.
Their bottom line (net profit) was 1.1 billion.

They’ve also increased sales for every quarter for the last 60 quarters (15 years) and are planning to open 900 stores this year and 1000 in 2017 (IMO pretty aggressive for a company that “only” has 12,400 stores).

I can’t find the number of customers they have each year, but it seems like every metric I see is always up from one year to the next going way back.

Seems like it might be a good stock to buy.

This is one of those things where what you see often isn’t the case and you have to look at the numbers. I can’t tell you how many times it seems like my store must have had an awful day but it turns out to be great* or we think a product isn’t doing well but then you look back at the bills and see you’ve reordered it pretty often. It’s why, even a mom n pop store like mine has to track damn near everything. It’s too easy to let what you to think is the case cloud your judgement.
That’s why I wanted to find the number of customers they had each year. It’s easy to say ‘this place is always empty’, but then you do the math and find out that, on average, each store has 1000 customers per day and…maybe it’s was just empty the few times you’re there. **

*My theory is that when there aren’t that many customers, the ones that are there spend more time milling around and buying stuff. When we’re slammed, even the regulars feel rushed and get in and out with just what they need.

**Oddly, I just tossed out that 1000 number, but 1000 people per day times $5 per person (or 500 x $10) times 12400 stores works out eerily close to $20b
ETA, TLDR, if a company is pubic (Dollar Store: DG) and you want to know how much it’s making money or even IF it’s making money, the information is all online.

22

well dollar tree is run by greenbriar international and they make their own or license everything they make even the Disney toys they sell they also get specifically sized items made just for them ours has a grocery section that isn’t bad if you need something fast

but the above poster is right here in ca dollar tree and 99cent only stores here have become the new dime stores and almost put big lots out of business

but yeah when I first seen “dollar stores” it was just mom and pops selling the same stuff a sprouse reitz or ben franklin would sell… with whole sale stuff like you see at indoor swap meet malls

23

One thing to keep in mind:

I looked in one of these generic (don’t remember the name) stores - it was larger than the Dollar Tree up the road.
I looked at their “bleach” - name-brand is 6% chlorine. Their stuff was 3%.

You can make a lot of money selling something at 70% or the name-brand if you buy it for 50% of the name-brand.

24

I think teachers & room moms keep dollar stores in business. Every time we have to decorate the classroom for this holiday or that, dollar store is our go to place. Its also great for getting materials for classroom projects

25

Contrary to popular belief, Dollar General ain’t that cheap. Margins aplenty.

26

The big appeal around here is that their house brand Clover Valley is almost always made in the USA.

There are six that I consider close (and nine in a five mile radius of my house), and two of these are really close. One has a larger food section, one has a larger home supplies (light bulbs, tupperware, etc) and the another has more clothes. It seems like each one around here has one section that is slightly better stocked than the others.

And, I always buy their store brand of Ivory with aloe body wash. It’s cheaper than the name brand, and doesn’t cause me to break out.

27

My Dad buys his toilet paper there. :slight_smile:

I can see the appeal if its just a couple random things that you can easily veer your car into the parking lot at the last minute instead of driving to a Wally World and search all over the store to find three things and then check out with a hundred people that each have like 50 items and even though Walmart has like 25 registers for some reason it seems like they only ever have a few open. There’s definitely a lot less hassle.

28

They do pretty well around me in the midwest. Like the posters above said, they tend to be located in smaller communities without a walmart close by, or if they are in a town with a walmart or similar, on the opposite side of town. Casey’s general store (which is a gas station/convenience store) has a similar “be one of the only places to go in an underserved area” business model.

29

I always thought that Dollar General was the place where Walmart employees could afford to shop.

30

Dollar stores have very low overhead. They go for large spaces at low cost and need a minimal number of employees. Remember that what they sell for $1 isn’t even worth $1. The sole marketing attraction of their products is the low price, they don’t make many decisions about what to stock other than on a price basis. I have seen some perishables in Family Dollar stores, and I suspect they have deals with the suppliers to take back unsold merchandise in those cases, or they are getting it at ridiculously low prices.

I miss the early dollar stores that opened near me around 25 years ago. What they sold then was overstocks and liquidated items. We used to buy piles of Eastern Airlines plastic plates and actual metal utensils that we treated like paper plates and plastic utensils because they were so cheap. For a few bucks we could buy the kids a load of knockoff toys. There were plenty of things available for $1 or less that were actually worth more than that, but it was hit or miss to find anything you actually needed or wanted.

31

Why shop at a dollar store when I can make my own BPA-laden plasticware and hydrogenated vegetable oil snack cakes at home and sell them to myself for 99 cents?

32

Some things aren’t worth buying there, and some are. They have their own store brand of OTC drugs that’s a pretty good deal.

They’re sort of a lower-class Walgreens, without the pharmacy.

33

I imagine they save a lot of money by not having to mark everything with a price tag. Everything costs a dollar. Period. No need to put stickers on items or shelves or constantly have to update a computer database with pricing. That’s gotta save a lot of cost.

34

Again, Dollar General ain’t that kind of store.

35

There’s a Dollar General about 3 miles from where I live. The nearest grocery store is about 7 miles away, so DG can be convenient for a quick pickup. I ran there yesterday for ice and a dozen eggs. I’ve also run there when we needed cough medicine or ibuprofen. They also have a particular brand of cookies that my husband really likes.

I’m always surprised how busy it is. One day, I was in line behind a woman with a full cart of groceries - she’d spent over $50. I never thought of it as a regular shopping stop.

36

Ah, I retract that. We don’t have Dollar General in my area so I was confusing it with The Dollar Store or the 99 Cent Store.

37

Yes, it’s been pointed out multiple times in this thread but people who apparently have never been to a Dollar General keep referring to it as a “dollar store”. Dollar General’s have one aisle with items for $1.00 the rest of the store is basically general merchandise like you would find in a Walmart.
Here is their website:
http://www.dollargeneral.com/home/index.jsp
Take a moment to look at it and you will see that it is not a “dollar store”.
There are 14 Dollar General’s within 5 miles of me. I go there from time to time when I just need a few things in a hurry, etc. Like others have said, there are many Dollar Generals in rural areas but we also have 2 Walmarts, a Walmart Family Market (with another one being built), a Target and a KMart.

38

That’s where they are right now, and they’re aiming for 22 per city. (see page 19 and the next few pages of this PDF). It seems excessive, but depending on the area, some cities will have just as many, if not more Walgreens (or other chain c-stores).

39

:stuck_out_tongue:

That’s so crazy, it just might work.
Is the plural Dollar Generals or Dollars General?

40

Off the top of my head I can think of two dollar stores located in the shadow of either Walmart or a liquidation retailer. The former is ALWAYS busy, so much so that you have to circle the parking lot a few times before getting a space. The latter doesn’t look as busy but that’s because most people will hit both that and the liquidation place.

I like poking through them. I’ve bought cleaning products, laundry detergent, and wrapping paper before. One of my friends buys containers for her home-baked goods there. Another friend buys all her stocking stuffers there.