Dollar General's Bussiness Strategy

646 Words2 Pages
bulb-icon

Recommended: walmart competitive market

Distribution Because Dollar General does not sell in bulk, they tailor their supply chain to focus on more frequent deliveries of goods to smaller stores. Although this creates some inefficiencies relative to their big box rivals who were able to ship larger truckloads to their stores, Dollar General benefits from a denser network of stores in many areas as they had more than twice as many US locations (11,061) as Wal-Mart (4,807) in 2013. Additionally, Dollar General owns all trailers moving to and from distribution centers, but subcontracts trucking [dollar general 10K]. This reduces their necessary capital investment, while retaining key distribution activities including control of the loading, unloading and delivery scheduling of products to both retail stores and distribution centers. Pairing Cost Leadership & Convenience (Strategy & Value Creation, Delivery and Capture) Historically, Dollar General operated in a highly price sensitive market segment, with 55% of its consumer base earning an average annual gross income of less than $40,000.[2] To attract these customers, Dollar General employed an Everyday Low Price strategy similar to Wal-Mart’s. Thus, keeping costs low and driving high traffic volumes were critical to the company’s financial success. Dollar General achieved this strategy in several ways, including keeping rents and labor costs low, locating in low-income, high traffic areas that offered consumers few substitutes, and offering a wide variety of popular CPG and white label goods. Given the dominance and fiercely competitive nature of Wal-Mart and Target within the big box discount retail industry, Dollar General avoided competing head-to-head with these larger rivals by differentiating a classic generic bu... ... middle of paper ... ...nce 2008), [CITE: #7?] it adversely impacted Dollar General’s profitability given their higher purchasing costs and lower margins relative to other categories. Analysts estimated that Dollar General’s margins fell from 7.4% in 2008 to 7.1% of net sales in 2013. [2] To counteract decreased profitability, Dollar General added 700 low-price, higher-margin white label brands and grew these brands from 17% to 22% of total consumables sales beginning from 2007 to 2013. Among Dollar General’s white label brands are several trademarked lines, including Dollar General, Dollar General Market, Clover Valley, DG, Dollar General Guarantee, Smart & Simple, true living, and Sweet Smiles.[7] Additionally, despite Dollar General being a primarily “home grown” company, Dreiling had purchased several high-profile but defunct brands, including Rexall Drugs, a bankrupt pharmacy chain.

Show More
Related

  • Analysis Of Five Forces Analysis Walgreens

    715 Words  | 2 Pages

    Although this force has the least concern, it might be the key for Walgreens to position itself as the number one pharmacy retailer. Currently, Walgreens cannot rival the overall cost leadership strategy like Walmart. Walgreens has offered the differentiated medical services that customers can find convenience. However, if Walgreens can lower bargaining power of its suppliers, Walgreens would be able to use combination strategy that integrate overall low cost and differentiation together. The combination or hybrid strategy has been proven that can remain successfully better than overall low cost and differentiation strategies alone (Baroto et al.,

    Read More

  • Case Study: Dollar Tree

    864 Words  | 2 Pages

    Dollar Tree’s acquisition of the Family Dollar stores will better equip them to compete with the leaders in the market such as Wal-Mart, Target, and Dollar General. The acquisition of Family Dollar establishes a new giant of the dollar-discount industry; Dollar Tree will expand significantly to 13,000 stores throughout the United States and Canada (DollarTree.com, 2015). This acquisition also increases Dollar Trees’ access to markets with lower incomes, increases their buying power and their ability to negotiate greater discounts from suppliers while still discovering ways to reduce

    Read More

  • The Success of Wal-Mart: Sam Walton's Dream

    840 Words  | 2 Pages

    Wal-Mart was not always the superstore that it is today. In the late 1940’s, Sam Walton took up the ownership of a Ben Franklin’s store in Newport, Arkansas. Even during the time before Wal-Mart, Walton was all about keeping prices low. It is every business’s objective to find the right balance between the prices of an item to meet the demands of the consumer in order to maximize revenue. How could Walton still make a profit while keeping the prices low for the consumer? Even while still operating the Ben Franklin’s store, he would purchase products from wholesalers and minimally markup the price. Where most retailers would rely on markup prices to gain profit, Walton would rely on pure volume in order to make up for the low prices (Frank, 2006). This was a smart decision on his part because it makes sense that if a consumer can get the same product for a lower price then they will purchase the cheaper product. It was not until 1962 that Sam Walton opened the first Wal-Mart store, also in Arkan...

    Read More

  • The Financial Evolution of Dollar General Corporation

    929 Words  | 2 Pages

    As the private brands may not achieve or maintain market acceptance these brands may provide the adverse results expected. Financial condition and results of operation can be negatively affected if pricing, quality and other factors are not up to customer’s satisfaction levels. With all brands sold by Dollar General there is the unfortunate shrinkage that may occur. Profitability may be negatively affected by inventory shrinkage and the inability to properly manage the inventory balances. Effective inventory management is a key component of Dollar General’s business success and profitability. If the company’s buying decisions do not accurately predict consumer trends, excess inventory will negatively affect financial results. Inventory turnover has improved and the company is aware and focusing on addressing all of these risks in the most productive way possible. The biggest risk that the company is facing from a consumer’s perspective is that their sector is highly competitive. Operating in a basic consumer goods market there is already a strain on margins, and low prices are necessary to stay competitive. This restriction on increasing prices may result in a loss when costs increase. The objective is to keep overhead, salaries, marketing and all costs to a bare minimal. Other competitors have saturated the geographic market where Dollar General once was

    Read More

  • Is Walmart Good For America Case Study

    707 Words  | 2 Pages

    With the ability to control its stock and see at a glance how any store is performing, Wal-Mart is able to keep its finger on the pulse of its business and make critical adjustments as necessary. The low transportation costs it achieves with its own transportation system makes it possible to deliver goods to different stores within or under 48 hours, and transportation costs are only 3% of the total costs, as compared with 5% for their competitors ("Wal-Mart 's Supply Chain Management Practices: The Benefits Reaped"). Its advanced methods of transport, This combination of technology and down-home attention to customers as people makes Wal-Mart hard to beat on any soil, and it uses the winning formula to maximum advantage.

    Read More

  • Walmart: A SWOT Analysis Of Walmart

    1185 Words  | 3 Pages

    Walmart is one of the strongest brand names in the United States, there aren’t many people who don’t know

    Read More

  • Walmart Strategic Analysis

    1778 Words  | 4 Pages

    Wal-Mart has a competitive advantage that helps set them apart from the others. They operate under economies of scale. Competition has a hard time matching superstores on price because they typical lack volume to negotiate better deals With the development of its own distribution center and scale of operations, Wal-Mart is able to order in larger quantity at lower prices and passed on the savings to its customers. This generates store traffic and supports a one-stop shopping experience.

    Read More

  • Wal-Mart's Competitive Environment

    1679 Words  | 4 Pages

    Wal-Mart’s competitive environment is quite unique. Although Wal-Mart’s primary competition comes from general merchandise retailers, warehouse clubs and supermarket retailers also present competitive pressure. The discount retail industry is substantial in size and is constantly experiencing growth and change. The top competitors compete both nationally and internationally. There is extensive competition on pricing, location, store size, layout and environment, merchandise mix, technology and innovation, and overall image. The market is definitely characterized by economies of scale. Top retailers vertically integrate many functions, such as purchasing, manufacturing, advertising, and shipping. Large scale functions such as these give the top competitors a significant cost advantage over small-scale competition.

    Read More

  • Wal Mart's Supply Chain

    1889 Words  | 4 Pages

    A supply chain is a system through which organizations deliver their products and services to their customers. The network begins with the basic ingredients to start the chain of supply, which are the suppliers that supply raw materials, ingredients, and so on. From there, it will transfer the supplies to the manufacturer who builds, assembles, converts, or furnishes a product. The chain now needs to get the product to the consumer by transporting the finished product from the manufacturer through a warehouse or distribution center. An example is that Wal-Mart has a nearby distribution center where products are delivered there and then split up to be delivered to a retail Wal-Mart. “Wal-Mart will take responsibility for breaking down larger loads and delivering the product to other Wal-Mart stores” (Ehring 1).

    Read More

  • Dollar General Case Study

    1273 Words  | 3 Pages

    The company's success can only be derived from its current ability to keep costs to a low, employing minimum staff to operate each store as one point. Another would be stock in general; keeping it at a low price enables more of the item to be sold. Finally Dollar Generals policy's on getting a store ready and opened in 8 days or less. This in term would also generate enough hype and attention to a new stores opening without the means of expensive advertisement.

    Read More

  • Walmart Internal Analysis

    888 Words  | 2 Pages

    Walmart’s ownership and execution of the supply chain is a core competency that sets them apart from the competition. They have minimized the turnaround time to replenish inventory back into the stores. They also have agreements with suppliers to deliver products direct to the stores. Walmart owns 158 distribution centers strategically located in close proximity to many Walmart stores. The distribution centers employ 7,000 truck drivers to deliver truckloads of merchandise to the 10,700 retail stores with their tractors and trailers, as the inventory system dictates.

    Read More

  • Analysis Porter's Five Forces Analysis Of Walmart

    755 Words  | 2 Pages

    In any case, the external component of the low assortment of substitutes makes it hard for shoppers to move far from products accessible from retailers. Additionally, some substitutes are costlier than the very economical products obtainable at Walmart stores. Along these lines, in the retail business environment, the threat of substitutes has a weak force on Walmart (Greenspan, 2016).

    Read More

  • Strategic Analysis Of Wal-Mart's Supply Chain Management

    1616 Words  | 4 Pages

    The benefits or competitive advantage Wal-Mart derived over the years from its supply chain management practices is also covered. The reason Wal-Mart is ahead of their competition is because they invest in technology in the 1980s. This investment paid off in the long run. Wal-Mart invested heavily in IT and communication systems to effectively track sales and merchandise inventories in stores across the country. They have set up own satellite communication in 1983. Employees at the stores have the ‘Magic Wand’ at hand. These barcode scanners allow you to check the prices of items at that particular store by scanned the barcode on the product. This is especially helpful when there is clearance that isn 't always marked and sometimes clearance items are cheaper than they

    Read More

  • Case Study Of Walmart Stores, Inc.

    1478 Words  | 3 Pages

    The gross profit during the year 2015 was actually a $10 billion increase from their fiscal year 2014 (University of San Francisco, 2015). Over the past six years, Walmart continues to generate these types of numbers, representing increases in growth, time and time again. The company’s income was generated by more than 4,500 stores in the United States alone which is supported by a supply chain that moved from number 14 to number 13 on research and analyst company Gartner’s annual ranking (University of San Francisco, 2015). Many business professionals have analyzed and interpreted Walmart’s supply chain management approaches, making it apparent which elements of their strategy have proven effective. These major supply chain components that have shaped Walmart’s success over recent years are their buyer bargaining power (one of Porter’s Five Forces), focus on the overall customer experience, and investments in emerging technologies along with the implementation of these technologies in their business

    Read More

  • Brand Identity In Pharmaceutical Industry

    1122 Words  | 3 Pages

    ... 2003). For decades, a pharmaceutical company's brand strategy was to discover a drug that was needed, introduce it to the doctor via a sales representative, and watch the prescriptions get filled. With several factors causing change in the pharmaceutical industry in the way in which medications are marketed and sold, it will be significantly important for these companies to brand their products. This will be important if more drugs are switched to over-the-counter (OTC), upon expiration by the FDA (Kapoor and Epstein, 2004) since many choices will be available on the shelf to choose from. As more drugs are switched to OTC in both pharmacies and supermarkets, healthcare is increasingly in the consumer's hands (Brand Strategy, 2004). The early years of the prescription lifecycle will be important for drug companies to establish brands that are ready to be switched.

    Read More

More about Dollar General's Bussiness Strategy

Open Document