in March 2016, Chief Executive Officer Todd Vasos outlined the chain’s “2020 Vision” for 125 investors gathered at a hotel in Nashville, south of the headquarters in suburban Goodlettsville, Tenn. (Shareholders include T. Rowe Price Associates, the Singapore sovereign wealth fund GIC, BlackRock, and Vanguard Group.) The presentation detailed a site-selection strategy focused on small towns, dubbed “Anytown, USA.” Then Jim Thorpe, Dollar General’s chief merchandising officer at the time, defined the core customer for the investors: “Our Best Friends Forever”—an extremely cash-strapped demographic, with a household income less than $35,000, and reliant on government assistance, that shops at Dollar General to “stretch budgets.” Thorpe said these BFFs represented 21 percent of the chain’s shoppers and 43 percent of its sales. His final slide touted a goal of increasing sales 50 percent, to $30 billion, by 2020.
“It reminds me of a craps table,” Brown, the commercial real estate analyst, says. “Essentially what the dollar stores are betting on in a large way is that we are going to have a permanent underclass in America. It’s based on the concept that the jobs went away, and the jobs are never coming back, and that things aren’t going to get better in any of these places.”
I was stunned by the vast numbers of Dollar General stores when we visited my Dad in the “armpit” between Florida and Alabama. It was like Starbucks. You’d pass one every 5 miles.
There are around 15 in the area I live, in a 25 mile radius. I don’t find their prices that competitive. And usually find better deals at Dollar Tree (where everything is $1).
All those “dollar” stores are popping up like mushrooms. Dollar General, Dollar Tree, Family Dollar. Makes perfect sense when you believe things aren’t going to improve for the lowest earners any time soon.
This is basically what happened in the UK after the financial crisis. Pound stores took up something crazy like 25% of all new retail leases in 2009 and 2010
They fill a useful function; there will always be surplus goods, and you want to extract some value from that expired can of Chunky’s Soup. Someone’s always at the bottom, and they need to eat.
What gets me is the enthusiasm people show toward shopping there. They LOVE these stores. It’s some sort of status symbol. (Yes, poor people have status symbols too.)
Eh, some are pretty good. Especially out in BFE where you’d otherwise have to drive an hour to get into a larger town. I’ve shopped at a few in DFW that are nice. Of course, there are some I wouldn’t step into based on their outward appearance.
There are a few sub 500 population towns nearby that basically only have one store, and it’s a Dollar General. I wouldn’t say that these are necessarily cases of a “permanent underclass” that can’t afford more expensive wares (though these are predominantly lower class towns), and more just a case of these small population villages not being able to sustain larger stores, and finding a market that’s not particularly interested in driving 30-40 miles to pick up a loaf of bread and some toilet paper.
These towns aren’t going to be exploding in population any time soon, so I think they’ve got a good niche here.
I used to work with someone who was at Family Dollar before joining our team, right during acquisition talks a few years ago. She pointed out the fact that there are $1 stores, but Family Dollar was not one of them, or was meant to connote “stretching the family dollar”. Which was lost on me, I guess. The $1 stores are pretty crazy to keep their prices like that, it makes me feel its probably all junk marked up less than elsewhere. Or are they truly like Big Lots where they just take unsold product from other stores? Like TJ Maxx, but with set price limits…
The Dollar Store sells everything for a dollar, just like the name says. Dollar General just sells cheap. They are two different things, but both do well in even middle class neighborhoods. But yea, Dollar General stores are often the only thing around in some neighborhoods.
The biggest thing here recently is the Mexican branded grocery stores. They are huge and basically have everything, but they are like walking into a foreign country. I don’t say that in a bad way, they have tons of produce, meat and fish products. They have delis and tortillas being made fresh while you wait. But most everything is in Spanish.
Dollar stores have been around since the 1960s at least? According to the official us inflation calculator website, 12 cents in 1960 has the buying power of a dollar in 2017. And 15 cents in 1970 has the buying power of a dollar in 2017.
Therefore technically these are dime stores, in the classical sense.
Dollar Generals aren’t just opening up in “poor areas”, either. One opened up about ten minutes from here in Inman Square in Cambridge, generally considered to be one of the most competitive real estate markets in the country. Even there, though, they seem laser focused: despite the fact that a 2 bedroom condo in Inman Square will cost you just shy of $1M, there are several low-income housing projects within the general area.
The Mexican supermercados are freaking awesome. The ones here are anyway. Their produce, meat and fish is several orders above the crap Safeway is trying to pawn off, and at like a 30% lower price.
