Dollar General vs. Wal-Mart Essay Example
Executive Summary
With only 30% of its sales coming from dollar items, Dollar General is competing on a larger scale with more known product brands. Educating the consumer in order to change their perception of dollar stores will increase sales and generate larger average dollars spent by a customer. Increasing advertising about Dollar General’s brand-named products will help educate consumers and change their perceptions. Datamonitor reported consumer’s worry that Wal-Mart threatens local businesses by under cutting prices and making them unable to compete. Dollar General can capitalize on this thought and put consumer’s worries at ease by partnering with local farmers and distributing local produce. This will increase customer loyalty while eliminating that negative perception (datamonitor).
Situation Analysis
Dollar General Situation Analysis
Market Demographics
Median Household Income – Less than $75,000
Trade Area Population – At least 4,500 Dollar General targets customers in the low, medium, and fixed income segments. Dollar Generals’ core base of customers has an annual income of $30,000 or less. The company prefers to operate its stores in small towns rather than large cities in an attempt to draw customers in from the surrounding area based on the convenience and location of its stores. Households in rural areas account for 27% of dollar store sales (Hale, 2002). Examples of other key demographics for Dollar General are lower educated females, African-American households, large and blue-collar households, and low-income (Chart 3). The dollar store is over-developed in rural areas; however, recently dollar stores have experienced a significant increase in household penetration across all income groups with higher income shoppers being the fastest growing consumer segment (Berry, 2007). Appealing to the moderate and upper-income shoppers is the treasure hunt atmosphere of the stores. Dollar stores have been able to “expand their customer base to
With only 30% of its sales coming from dollar items, Dollar General is competing on a larger scale with more known product brands. Educating the consumer in order to change their perception of dollar stores will increase sales and generate larger average dollars spent by a customer. Increasing advertising about Dollar General’s brand-named products will help educate consumers and change their perceptions. Datamonitor reported consumer’s worry that Wal-Mart threatens local businesses by under cutting prices and making them unable to compete. Dollar General can capitalize on this thought and put consumer’s worries at ease by partnering with local farmers and distributing local produce. This will increase customer loyalty while eliminating that negative perception (datamonitor).
Situation Analysis
Dollar General Situation Analysis
Market Demographics
Median Household Income – Less than $75,000
Trade Area Population – At least 4,500 Dollar General targets customers in the low, medium, and fixed income segments. Dollar Generals’ core base of customers has an annual income of $30,000 or less. The company prefers to operate its stores in small towns rather than large cities in an attempt to draw customers in from the surrounding area based on the convenience and location of its stores. Households in rural areas account for 27% of dollar store sales (Hale, 2002). Examples of other key demographics for Dollar General are lower educated females, African-American households, large and blue-collar households, and low-income (Chart 3). The dollar store is over-developed in rural areas; however, recently dollar stores have experienced a significant increase in household penetration across all income groups with higher income shoppers being the fastest growing consumer segment (Berry, 2007). Appealing to the moderate and upper-income shoppers is the treasure hunt atmosphere of the stores. Dollar stores have been able to “expand their customer base to