Dollar General: Deep Discount Retail Industry
INTRODUCTION
Dollar General is an aggressive, competitor in the deep discount retail industry. Recent annual sales figures totaling $6.9 billion across 29 states (close to 7,000 stores) has placed the chain at the top of the dollar store category of discount retailers, surpassing chains Family Dollar, Fred’s and Dollar Tree. The company also competes aggressively with chains such as Wal-Mart, Kmart, CVS and Rite Aid. The store currently offers a product line of general merchandise that includes housewares, cleaning supplies, health and beauty aid, clothing, packaged foods, stationery, seasonal offerings and other household consumables. Unlike its competitors, Dollar General place new stores within the communities. Dollar General feels …show more content…
that filling the role of the “neighborhood store” is a big part of its success. The company has become known for rapidly opening stories and running each store at the lowest operating cost possible. It’s clear that Dollar General is the king of the discount retail market and not changing any time soon. However, within their success, there appears to be room for improvement as the company vies to remain the leader.
DOLLAR GENERAL’S IN GROWTH MODE
The low-budget Wal-Mart as we call it in Coldwater, Mississippi, Dollar General business strategy has afforded the company to grow at a faster rate than the larger retailers such as Wal-Mart, Kmart and Target. The company focuses on opening smaller, cheaper stories in rural areas in the neighborhood it operates earning it the name “the neighborhood store.” The company’s biggest advantage appears to be the small size and location of its stores. According to the book, the average store occupies 6,800 square feet of space. The company views leasing space as the most favorable financial practice. As a result, the company is filling the abyss as a result of smaller stores and “mom and pops” being forced out of business. I also believe that the company has an efficient supply chain management process in place. From a marketing standpoint, the company has positioned itself strongly within its customer’s eyes relative to quality and image. Further, the number of stores that the company has opened and continues to open will be virtually impossible for the larger retailers, as well as the smaller competitors, to match and/or even catch up with its growth. And as result of the number of stores the company operates, they will continue to have greater purchasing power and able to negotiate lower prices; thus, filling their promise to the customer for lower prices. The company has definitely found its niche.
Also, Dollar General decision to focus on an often neglected and overlooked market in the retail industry. Its target audiences include the low-to-lower middle income as well as fixed income customers. The focus on this group allows the company a fixed even-dollar pricing schedule with about one-third of all merchandise priced at $1 or lower and the maximum around $35. As a result, there growth has outpaced their competitors, which is evident by the company’s success. Further, the company’s choice to cater to its defined target audience allows for it to be selective in the placement of its stores. The fact that Dollar General focuses on consumable basic will guarantee them continued success. The items Dollar General is selling are items that people need to purchase on a regular basis.
Lastly, the company has developed a well-oiled machine when it comes to opening a new store. The process is a chain reaction of events that begins with a district or area manager making necessary decisions to execute the pertinent details needed from the construction to setting up the satellite links to getting the store ready for customer operation. This process has worked and will continue to work for the company, virtually taking about eight days to opening a new Dollar General.
DOLLAR GENERAL IMPROVEMENT ON SYSTEMS
Dollar General currently operates from a top-down management perspective offering very little employee input.
Suffice it to say, the senior managers at the corporate level are making long-term strategic decisions about the company, its products, operating procedures, product choices. At the same time, the middle managers are carrying out the objectives, which ultimately is passed down to the operational employees or as they refer to them “setters.” The company doesn’t employee a level of “thought leadership” which does not establish their leaders as experts in the field. With their aggressive strategy, Dollar General Executives might be very well poised to be “sources” to journalists, role models for other business executives and/or industry organizations. In my opinion, this tactic could bring a higher level of respect to Dollar General and its executives. The culture that’s surrounds Dollar General reminds me of the “worker bee” environment where the work needs to get down without any questions or rewards. Not explained within the text, but from personal experience, the company does not seem to invite lower level employees nor that of store manager’s opinions on how to operate their stores (I have a cousin who has worked at Dollar Tree in Jackson, Mississippi for eight years and this was always her …show more content…
complaint).
Dollar General is not investing in an information system to help streamline its processes. The company spends less on technology per employee every year. There is no email. No local server keeping track of inventory. Employees, particularly store managers, have no systematic way of verifying if receivables being downloaded from the delivery trucks are accurate. Aside from picking up the telephone and calling it in, there is no way of getting details back to the corporate office. Having worked in retailed, some stores mix communication vehicles. Dollar General doesn’t. It relies on one satellite system to handle its communication with their local stores as well as telephone conversations. Dollar General has focused so much on growth strategies that it hasn’t slowed down to take a look at technological infrastructures. To not do so will yield consequences over time; and, they are already starting to experience some of these consequences. These deficiencies in technology has caused the company suffers from a high percentage of shrinkage. About three percent of sales disappeared last year due to theft and loss. Items are bar coded, but store employees don’t have readers or software to verify shipments and check in products as they hoist hundreds of cartons off delivery trucks every week. There is just no store-level inventory system.
RECOMMENDATIONS
Dollar General is a small fish in a large pond but with a competitive advantage. The company is experiencing continuous growth and is proving to be a major player in discount retail category. However, the company can stand an overhaul in a few areas.
The company should put forth a more aggressive technology strategy as it ramps up and sustain its business strategy in the retail industry.
It is recommended that Dollar General also invest in skilled workers and/or provide training for its existing labor force. I would first recommend that Dollar General initiate a Fishbone Diagram to truly evaluate the processes that are working and not working for the company. After doing so, it will become apparent that the current process of receiving products could stand an overhaul. The company should first initiate a fishbone diagram analysis to review the methods that are working and not working for the company. It seems apparent that its current process of relying on managers to instinctly know what products are being received during shipment is not an accurate one. After reviewing its finding, the company will learn that it needs to develop a better system of receiving shipments. It is recommended that company employ some sort of enterprise resource planning systems to provide organizational-wide coordination and integration of key business processes. This process, in my opinion, will provide not only the store managers, but also the corporate executives, with more precise and timely information. It is also recommended that company develop a transaction process system to further refine its daily operation process. I would also suggest that Dollar General make use of electronic handheld devices at the receiving level to
ensure they are in fact receiving the quantity of items they are ordering. This will eradicate the shrinkage rate that the company is experiencing. By utilizing these handheld devices, the information and/or data collected will be transmitted directly to corporate. As the company reduces the amount of shrinkage the company endures annually, they will be able to spend more time training/educating new managers. Lastly, I would suggest that the company work on its internal culture. As a result of the shrinkage rate, the company assumed the employees were stealing. It would be in good taste to internally instill a level of confidence in its employees with rewards and/or a gesture to reaffirm its commitment to its employees. In doing so, it would be my belief that the company’s employee will start to feel better about the company. This new technology allows Dollar General to save time and cut labor costs, yet still efficiently distribute merchandise.
In closing, Dollar General’s growth will not slow down any time soon. The company is set to enhance their competitive advantage and continue to expand nationally, if not internationally. In considering its growth, if the company take full advantage of implementing the suggested technological changes – hand-held electronic devices, implementing findings from the Fishbone Diagram analysis, developing an enterprise resource planning system – will only argument the success of Dollar General.
Dollar General is an aggressive, competitor in the deep discount retail industry. Recent annual sales figures totaling $6.9 billion across 29 states (close to 7,000 stores) has placed the chain at the top of the dollar store category of discount retailers, surpassing chains Family Dollar, Fred’s and Dollar Tree. The company also competes aggressively with chains such as Wal-Mart, Kmart, CVS and Rite Aid. The store currently offers a product line of general merchandise that includes housewares, cleaning supplies, health and beauty aid, clothing, packaged foods, stationery, seasonal offerings and other household consumables. Unlike its competitors, Dollar General place new stores within the communities. Dollar General feels …show more content…
that filling the role of the “neighborhood store” is a big part of its success. The company has become known for rapidly opening stories and running each store at the lowest operating cost possible. It’s clear that Dollar General is the king of the discount retail market and not changing any time soon. However, within their success, there appears to be room for improvement as the company vies to remain the leader.
DOLLAR GENERAL’S IN GROWTH MODE
The low-budget Wal-Mart as we call it in Coldwater, Mississippi, Dollar General business strategy has afforded the company to grow at a faster rate than the larger retailers such as Wal-Mart, Kmart and Target. The company focuses on opening smaller, cheaper stories in rural areas in the neighborhood it operates earning it the name “the neighborhood store.” The company’s biggest advantage appears to be the small size and location of its stores. According to the book, the average store occupies 6,800 square feet of space. The company views leasing space as the most favorable financial practice. As a result, the company is filling the abyss as a result of smaller stores and “mom and pops” being forced out of business. I also believe that the company has an efficient supply chain management process in place. From a marketing standpoint, the company has positioned itself strongly within its customer’s eyes relative to quality and image. Further, the number of stores that the company has opened and continues to open will be virtually impossible for the larger retailers, as well as the smaller competitors, to match and/or even catch up with its growth. And as result of the number of stores the company operates, they will continue to have greater purchasing power and able to negotiate lower prices; thus, filling their promise to the customer for lower prices. The company has definitely found its niche.
Also, Dollar General decision to focus on an often neglected and overlooked market in the retail industry. Its target audiences include the low-to-lower middle income as well as fixed income customers. The focus on this group allows the company a fixed even-dollar pricing schedule with about one-third of all merchandise priced at $1 or lower and the maximum around $35. As a result, there growth has outpaced their competitors, which is evident by the company’s success. Further, the company’s choice to cater to its defined target audience allows for it to be selective in the placement of its stores. The fact that Dollar General focuses on consumable basic will guarantee them continued success. The items Dollar General is selling are items that people need to purchase on a regular basis.
Lastly, the company has developed a well-oiled machine when it comes to opening a new store. The process is a chain reaction of events that begins with a district or area manager making necessary decisions to execute the pertinent details needed from the construction to setting up the satellite links to getting the store ready for customer operation. This process has worked and will continue to work for the company, virtually taking about eight days to opening a new Dollar General.
DOLLAR GENERAL IMPROVEMENT ON SYSTEMS
Dollar General currently operates from a top-down management perspective offering very little employee input.
Suffice it to say, the senior managers at the corporate level are making long-term strategic decisions about the company, its products, operating procedures, product choices. At the same time, the middle managers are carrying out the objectives, which ultimately is passed down to the operational employees or as they refer to them “setters.” The company doesn’t employee a level of “thought leadership” which does not establish their leaders as experts in the field. With their aggressive strategy, Dollar General Executives might be very well poised to be “sources” to journalists, role models for other business executives and/or industry organizations. In my opinion, this tactic could bring a higher level of respect to Dollar General and its executives. The culture that’s surrounds Dollar General reminds me of the “worker bee” environment where the work needs to get down without any questions or rewards. Not explained within the text, but from personal experience, the company does not seem to invite lower level employees nor that of store manager’s opinions on how to operate their stores (I have a cousin who has worked at Dollar Tree in Jackson, Mississippi for eight years and this was always her …show more content…
complaint).
Dollar General is not investing in an information system to help streamline its processes. The company spends less on technology per employee every year. There is no email. No local server keeping track of inventory. Employees, particularly store managers, have no systematic way of verifying if receivables being downloaded from the delivery trucks are accurate. Aside from picking up the telephone and calling it in, there is no way of getting details back to the corporate office. Having worked in retailed, some stores mix communication vehicles. Dollar General doesn’t. It relies on one satellite system to handle its communication with their local stores as well as telephone conversations. Dollar General has focused so much on growth strategies that it hasn’t slowed down to take a look at technological infrastructures. To not do so will yield consequences over time; and, they are already starting to experience some of these consequences. These deficiencies in technology has caused the company suffers from a high percentage of shrinkage. About three percent of sales disappeared last year due to theft and loss. Items are bar coded, but store employees don’t have readers or software to verify shipments and check in products as they hoist hundreds of cartons off delivery trucks every week. There is just no store-level inventory system.
RECOMMENDATIONS
Dollar General is a small fish in a large pond but with a competitive advantage. The company is experiencing continuous growth and is proving to be a major player in discount retail category. However, the company can stand an overhaul in a few areas.
The company should put forth a more aggressive technology strategy as it ramps up and sustain its business strategy in the retail industry.
It is recommended that Dollar General also invest in skilled workers and/or provide training for its existing labor force. I would first recommend that Dollar General initiate a Fishbone Diagram to truly evaluate the processes that are working and not working for the company. After doing so, it will become apparent that the current process of receiving products could stand an overhaul. The company should first initiate a fishbone diagram analysis to review the methods that are working and not working for the company. It seems apparent that its current process of relying on managers to instinctly know what products are being received during shipment is not an accurate one. After reviewing its finding, the company will learn that it needs to develop a better system of receiving shipments. It is recommended that company employ some sort of enterprise resource planning systems to provide organizational-wide coordination and integration of key business processes. This process, in my opinion, will provide not only the store managers, but also the corporate executives, with more precise and timely information. It is also recommended that company develop a transaction process system to further refine its daily operation process. I would also suggest that Dollar General make use of electronic handheld devices at the receiving level to
ensure they are in fact receiving the quantity of items they are ordering. This will eradicate the shrinkage rate that the company is experiencing. By utilizing these handheld devices, the information and/or data collected will be transmitted directly to corporate. As the company reduces the amount of shrinkage the company endures annually, they will be able to spend more time training/educating new managers. Lastly, I would suggest that the company work on its internal culture. As a result of the shrinkage rate, the company assumed the employees were stealing. It would be in good taste to internally instill a level of confidence in its employees with rewards and/or a gesture to reaffirm its commitment to its employees. In doing so, it would be my belief that the company’s employee will start to feel better about the company. This new technology allows Dollar General to save time and cut labor costs, yet still efficiently distribute merchandise.
In closing, Dollar General’s growth will not slow down any time soon. The company is set to enhance their competitive advantage and continue to expand nationally, if not internationally. In considering its growth, if the company take full advantage of implementing the suggested technological changes – hand-held electronic devices, implementing findings from the Fishbone Diagram analysis, developing an enterprise resource planning system – will only argument the success of Dollar General.