Dollar General's Bussiness Strategy

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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.

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