Dollar stores flourish because they're fun

fun?? for who? you? work there a couple weeks and see how much fun it is!!

Dollar Stores may be 'fun' to shop in, but my own observation is that they are NOT flourishing. At least, not the independents. Of the 10 or so Dollar Stores that have graced my neighborhood in the past 7 or 8 years, there is exactly one left, a chain store. There is one other that I am aware of about 5 miles away, also a (different) chain store.

From my conversations with some of the owners and workers in the independent Dollar Stores (prior to their demise), I have concluded that it's a tough way to make a living. Possible even tougher than running an independent restaurant (of which I have some personal experience).

I do occasionally shop in a Dollar Store, but I rarely buy anything. On a lot of the items, the quality is so low that even a Dollar is too much. And in the one Dollar Store left in my neighborhood, I have noticed that some of the items that they sell for a Dollar can be purchased at the grocery store across the street for less. I *never* go into a Dollar Store looking for anything specific, because I already know they won't have it.

I have a few items that I got at some Dollar Store which I liked -- but I will never be able to find again, and they are now are wearing out. Sigh.

Where I live, it's a very depressed economy. But the Dollar stores are flourishing and growing by the year. In my small city alone, we have several stores that specialize in deep discounts. Some of the stores are chains only in my area, and others span a few states. I also happen to live within walking distance of a Dollar chain store, and feel blessed. They remind me of the old Five-and-Dime stores in a way. They even carry a few groceries. When I travel, the sticker shock in the stores overwhelms me. Call me spoiled, but these places can save you a LOT of money in too many areas to name!

I do not like to pay too much for anything. Have been able to score some pretty good deals including European cheese spreads to bath-salts and shaving cream. My son, a tenager, does not to go because he feels people will think less of him. Feel like a good ad campaign will do wonders.

Comparing Family Dollar (FDO) and Dollar General (DG) to Dollar Tree (DLTR) or 99 Cents Only (NDN), by suggesting that they are all single price-point stores, is not only incorrect but a disservice to your readers and to those retailers as well.

While DLTR and NDN feature single price points (one dollar and 99 cents, respectively), FDO and DG are “extreme value” sell merchandise from below a dollar to somewhere in the $20 range.

As for why the independent single price point “dollar” stores are on the wane, the answer is in simple mathematics. When “dollar” stores became common, in the early 1990's, they could sell a nickel’s worth of trinkets for a buck, showing a tidy 95% profit. But then shoppers began to expect more: they wanted glass cleaner that really cleans glass, bug killers that would eliminate insects, and paper towels that pick up spills as well as the brands they saw on television.

Quality suffered and/or the cost of goods soared. Gross margins dropped below 25% and, after covering the increased cost of goods as well as overhead, true “dollar stores” are now finding it nearly impossible to stay in business.

If they’re open from 9am to 9pm and sell one item per minute, they will only gross about $250,000 annually. After cost of sales and other expenses, that leaves no more than $25-35,000 a year for an owner who’s working 80+ hours per week--and few entrepreneurs enjoy working for $6 an hour!

DLTR hangs in there, partly because of volume (they sell about six items per minute and they gross about $1.5 million annually per store) and partly because they have the buying power of a large chain (allowing them to keep their cost of goods significantly below that of independents who have to rely on outside distributors).

(Even DLTR, however, is experimenting with higher-priced merchandise via its acquisition of “Deals” from Supervalu, an indication that DLTR is also seeing the “beginning of the end” for the true “dollar only” business model.)

In the meantime, stores like Family Dollar keep a very simple but extremely effective promise to their customers:

Park within a few feet of our door, shop for quality merchandise at reasonable prices, stay awhile and hunt for a few treasures or, if you’re in a hurry, we'll have you on your way in five minutes or less and you’ll have spent no more than maybe $20.

A Family Dollar store may offer fewer choices for sizes and brands of window cleaner than a shopper might find at larger stores, but the price will be right and the windows will be just as clean; bug spray choices may be limited to a non-advertised value brand, but it will be a quality product that kills bugs just as quickly (and just as dead!) as anything found anywhere else; and the paper towels will be more than adequate for just about any spill.

Maybe they should change their name from FAMILY DOLLAR to FAMILY VALUE!

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