Dollar General and the Extreme Value Retailing = Industry Internal Analysi
1. What is Dollar General's strategy to compete?
Dollar General has done an outstanding job of consistently implementing a focused low cost strategy. The company's strategic intent of being a customer-driven distributor of consumable basics and its effort has resulted in 6,300 stores in 27 states, $6.1 billion in sales, and 54,000 employees.
Dollar General Stores target large families, low-income and fixed-income and blue-collar households, and women ages 55 to 64. (C-87) Dollar General has determined that the yearly earnings of its customer base is $30,000 a year and below, and that one-third of its customers earn less than $20,000 a year.
Dollar General's strategy at being a low-cost provider is evidenced by minimizing labor and advertising costs, offering a limited assortment of merchandise, using a single merchandise presentation, locating in second tier shopping strips with low rents, and investing in technology and distribution. (C87).
The most critical element of the company's strategy for success was keeping its costs to a minimum through product selection, distribution strategy, advertising, and use of technology (C96).
By locating at least half of its stores in small towns, Dollar General took advantage of lower lease rates in those areas. (C-96)
In the early 1990's, 13 direct mail circulars were sent out to the public. In order to stay within its strategic focus, advertising costs were cut back. Advertising as a percentage of sales dropped from 4 to .5 percent as a percentage of. When the company eliminated most of its direct mail advertising, some store sales seemed to decline initially. However, the change proved beneficial in the long run. Lower costs allowed the company to lower its selling prices, which led to increased sales (C96). In order to keep costs down, the company needed to have the latest technology. A huge improvement occurred in 2002 when the company went to a perpetual inventory system in its stores. This enabled the
Dollar General has done an outstanding job of consistently implementing a focused low cost strategy. The company's strategic intent of being a customer-driven distributor of consumable basics and its effort has resulted in 6,300 stores in 27 states, $6.1 billion in sales, and 54,000 employees.
Dollar General Stores target large families, low-income and fixed-income and blue-collar households, and women ages 55 to 64. (C-87) Dollar General has determined that the yearly earnings of its customer base is $30,000 a year and below, and that one-third of its customers earn less than $20,000 a year.
Dollar General's strategy at being a low-cost provider is evidenced by minimizing labor and advertising costs, offering a limited assortment of merchandise, using a single merchandise presentation, locating in second tier shopping strips with low rents, and investing in technology and distribution. (C87).
The most critical element of the company's strategy for success was keeping its costs to a minimum through product selection, distribution strategy, advertising, and use of technology (C96).
By locating at least half of its stores in small towns, Dollar General took advantage of lower lease rates in those areas. (C-96)
In the early 1990's, 13 direct mail circulars were sent out to the public. In order to stay within its strategic focus, advertising costs were cut back. Advertising as a percentage of sales dropped from 4 to .5 percent as a percentage of. When the company eliminated most of its direct mail advertising, some store sales seemed to decline initially. However, the change proved beneficial in the long run. Lower costs allowed the company to lower its selling prices, which led to increased sales (C96). In order to keep costs down, the company needed to have the latest technology. A huge improvement occurred in 2002 when the company went to a perpetual inventory system in its stores. This enabled the