10 Reasons Why Dollar General Is So Cheap!
Dollar General is a leading discount retailer with locations in more than 90 percent of the US states. The company has grown 17-fold in 25 years, yet margins have yet to decline.
Americans flock to buy premium brands at prices 20-40% lower than competitors. So you might be wondering, why is Dollar General so cheap?
To find out the top 10 reasons why Dollar General is so affordable, keep reading!
10 Reasons Why Dollar General Is So Cheap
1. Dollar General Stores are located in high-demand areas
Unlike its competitors, Dollar General stores are a lifeline for rural communities struggling to access healthy, nutritious food. Stores may operate in areas with fewer than 20,000 residents that are more than 15 miles from other grocery retailers.
While Wal-Mart and K-Mart are located in densely populated areas with higher economic growth rates, Dollar General identified a gap in the market that could provide lower-income areas with fewer retail options.
2. Scale up to save costs
Dollar General isn’t flashy; in fact, the basic brick-and-mortar structure has a positive impact on customer savings. The store is approximately 7,300 square feet, which is small compared to Walmart’s 150,000 square feet!
An increase in size usually indicates a more cost-effective store, and the owner can save a lot of money on rent, bills, and maintenance.
3. Keep away from third-party transportation
Plans to expand fleeting personal trucks are well underway; the company has grown from 80 work trucks to 200 in just one year! Dollar General can now skip third-party shipping and save on shipping.
The addition of distribution centers increases efficiency, improves deliveries and saves fuel, which translates into savings for customers!
4. Dollar General Sells Low and Makes High Profits
While many flock to Dollar General to shop for quality brands to save money, they may wonder why the prices are so low. Many products are sold in small batches or in individual packs, meaning customers are under no obligation to pay more than they need.
Because of its smaller merchandise, Dollar General’s gross margins are more than 30% higher than Walmart and Target. While buying smaller quantities can help shoppers stick to their budget, they may also be prompted to make multiple visits in less time.
5. Population development
More than 6% of Americans are currently unemployed; meanwhile, the cost of living in the US has risen by 2.3%. Statistics show that many new households will gravitate toward discount stores for groceries and home improvement.
Dollar General plans to open more than 1,000 new stores in 2021 to cater to its growing customer base. Sales revenue is expected to increase as new stores open in necessary locations, which means Dollar General can afford to keep prices low.
6. Dollar General private label
Shop Dollar General’s independent brands and save big on groceries, cleaning, health and beauty products. If you’ve visited Dollar General, you’ll be familiar with the company’s privately held grocery brand, Clover Valley. Minimal marketing of the brand means Dollar General can pass the savings on to customers.
Clover Valley’s extensive product range spans the fresh, frozen and dry goods sectors at a fraction of the price. Groceries are much cheaper since they are made and supplied in the USA.
7. Dollar General Coupon Ads
Encourage customers to use coupons and save extra!
Dollar General advertises coupons online, in-store and on the app; urges customers to check weekly ad for new discounts.
Dollar General generously allows customers to stack their coupons, allowing 2 coupons per item. One manufacturer and one Dollar General coupon can be used per item. Manufacturer will reimburse Dollar General for any coupons used to purchase merchandise.
8. Reduce employee base
When you enter a Dollar General store, you’re unlikely to be greeted by a greeter. Stores only have the exact number of employees needed to complete day-to-day store tasks, such as cashiers, shelf keepers, and managers. These additional savings are intended to benefit the customer.
Staff numbers are kept low to reduce day-to-day business costs. The free Dollar General app helps customers become more and more self-sufficient when shopping. Features like list making, coupon reminders and “DG and GO!” mean customers have less contact with staff.
9. Stick to traditional consumer goods
Many shoppers visit Dollar General knowing exactly what they’re looking for. The company does not invest in higher priced premium electronics, furniture or appliances.
Statistics show that 70% of sales come from consumables such as groceries, cleaning supplies, and health care products. The remaining 30 percent of profits come from seasonal merchandise, basic home products and apparel.
10. Dollar General keeps the economy steady
The impressive growth has allowed Dollar General to keep selling goods at low prices. In the past 5 years, Dollar General’s annual profits have never declined; in 2020, they generated a top-line revenue of $27.7 billion, an increase of 8.31% from 2019!
Big profit margins allow the company to expand; plans for 2021 call for 1,050 new stores, 1,750 refurbishments and 100 relocations. Widening the reach will mean more communities are likely to shop there; higher incomes can sustain sales of low-cost items.
To learn more, you can also check out my post on whether Dollar General is a franchise or not and statistics and facts about Dollar General.
in conclusion
Dollar General is strategically placed in rural areas to increase sales between communities based on distance from alternative retailers. The company has responded well to demand, using profits to expand its reach and cater to a growing population.
The business has increased the ability to sell private label and operate personal transportation vehicles. Dollar General made big savings by shrinking store sizes and reducing the number of employees. The management of low expenses allows the company to continue to offer affordable merchandise.
