Saturday, October 14, 2017

"Dollar General Hits a Gold Mine in Rural America"

BB:

one of 1,000 Dollar Generals opening this year as part of the $22 billion chain’s plan to expand rapidly in poor, rural communities where it has come to represent not decline but economic resurgence, or at least survival. The company’s aggressively plain yellow-and-black logo is becoming the small-town corollary to Starbucks Corp.’s two-tailed green mermaid. (Although you can spot her on canned iced coffee at Dollar General, too.) Already, there are 14,000 one-story cinder block Dollar Generals in the U.S.—outnumbering by a few hundred the coffee chain’s domestic footprint. Fold in the second-biggest dollar chain, Dollar Tree, and the number of stores, 27,465, exceeds the 22,375 outlets of CVS, Rite Aid, and Walgreens combined. And the little-box player is fully expecting to turn profits where even narrow-margin colossus Walmart failed.

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Dollar General’s sales per square foot have risen steadily in recent years, to $229, but they’re still far below the industry average of $325 and less than half of Walmart’s. Their gross profit margins were 30.9 percent over the last five years, though, compared with 25.1 percent at Walmart. The dollar chain doesn’t carry the big-ticket purchases—bikes, appliances—that Walmart does. It thrives mostly on selling low-ticket items and basics, such as toilet paper, that help shoppers on tight budgets get through the week. At Dollar General, a package of eight Pop-Tarts is $2, or 25¢ a tart. At Walmart, shoppers can buy the same eight-pack, but more often they save by spending $9.98 for a bulk package of 48—only 20¢ a tart. Dollar General doesn’t offer much bulk. A Dollar General store also has lower startup costs; it spends as little as $250,000 for a new store, vs. the more than $15 million Walmart puts into a new Supercenter.

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The dollar chains do provide jobs of their own, of course. The chain employs about 121,000 people nationwide and has said it will hire 10,000 more employees this year. But those jobs will be or are mostly low-wage. Salaried managers can earn about $40,000, but they often work long hours without overtime pay.