Dollar General is a leading discount retailer with locations in over 90% of American states. Having grown 17 times higher in 25 years, the company is yet to see a decline in profit rates.
Americans flock to stores to shop quality brands for 20-40% less than their competitors. So you may be wondering, why is Dollar General so cheap?
To find out the top 10 reasons why Dollar General is so affordable, read on!
10 Reasons Why Dollar General Is So Cheap In 2022
1. Dollar General Stores Are Situated In High Demand Areas
Unlike its competitors, Dollar General shops are a lifeline to rural communities with limited access to healthy, nutritious food. Stores are likely to operate in areas with fewer than 20,000 residents who live over 15 miles from alternative grocery retailers.
While Walmart and K-Mart situate themselves in highly populated areas with more prominent economic rates, Dollar General found a gap in the market in supplying lower-income areas with fewer retail options.
2. Scaling On Size To Save Costs
Dollar General’s appearance isn’t anything fancy; in fact, the basic brick-and-mortar structure positively impacts customer savings. Stores are approximately 7,300 square feet, comparably smaller to Walmart, built on 150,000 square feet!
Scaling on size often indicates stores are more cost-efficient, with owners making significant savings on rent, bills, and maintenance.
3. Steering Away From Third Party Transportation
Plans to expand fleeting private trucks are well underway; in just one year, the company increased its 80 working trucks to 200! Dollar General can now skip on third-party freight fees and save on shipping bills.
An increase in distribution centers has pushed efficiency, improved delivery, and fuel savings, beneficial to customer savings!
4. Dollar General Sell Low Quantities and Generate High Margins
While many flock to Dollar General for savings on quality brands, they may be wondering why the price is so low. Many products are sold in smaller quantities or single packages, meaning customers aren’t obliged to pay for more than they need.
Dollar General’s gross profit margins are over 30% higher than Walmart and Target due to smaller goods. While purchasing lower quantities can help shoppers stick to their budget, they may also be prompted to make multiple visits in a shorter space of time.
5. Developing Demographic
Over 6% of Americans are currently unemployed; meanwhile, the cost of living in the U.S has increased by 2.3%. The statistics suggest that many added families will be inclined to purchase groceries and home improvement goods at discount stores.
Dollar General caters to its growing customer base with plans to open over 1,000 new stores in 2021. Sales revenue is expected to increase following the opening of new stores in necessary locations, meaning Dollar General can afford to keep their prices low.
6. Dollar General Privately Owned Brands
Shop Dollar General independent brands to make significant savings on groceries, cleaning, health care, and beauty products. If you’ve visited Dollar General, you’ll be familiar with the company’s privately owned grocery brand, Clover Valley. Minimal marketing goes into the brand, meaning Dollar General can pass savings onto the customer.
There are plenty of Clover Valley products across fresh, frozen, and dry departments for a fraction of the price. Groceries are considerably cheaper as they are made and supplied in America.
7. Coupons Advertisement Throughout Dollar General
Customers are encouraged to utilize coupons and make extra savings!
Dollar General advertises coupons online, in-store, and on the app; customers are urged to check weekly advertisements for new discounts.
Dollar General generously permits customers to stack their vouchers, allowing 2 coupons per item. One manufacturer and one Dollar General coupon can be applied per item. Manufacturers reimburse Dollar General for any coupons used to purchase an item.
8. Keeping Employee Base Down
As you enter a Dollar General store, it is unlikely that you will be welcomed by a greeter. Stores only schedule the exact amount of employees needed to fulfill daily store tasks such as cashiers, shelf stockers, and managers. These extra savings are made to benefit the customer.
Employee presence is kept low to reduce day-to-day business costs. The free Dollar General app can help customers become increasingly self-sufficient when they shop. Features such as list-making, coupon alerts, and ‘DG and GO!’ mean customers can reduce contact with workers.
9. Sticking to Traditional Consumables
Many shoppers visit Dollar General knowing precisely what they are looking for. The company doesn’t invest in advanced electronics, furniture, or home appliances as they hold higher price points.
Statistics show that 70% of sales come from consumables such as groceries, cleaning products, and health care. The remaining 30% of margins are generated by seasonal goods, essential home products, and apparel.
10. Dollar General Maintains Economic Stability
Staggering growth has enabled Dollar General to continue selling merchandise at low prices. Over the last 5 years, Dollar General has yet to see a decrease in annual profits; in 2020, they generated their highest revenue of $27.7 billion – an 8.31% increase from 2019!
Large profit margins have allowed the company to expand; plans in 2021 aim to build 1,050 stores, renovate 1,750 stores and relocate 100. Expanding business reach will mean more communities are likely to shop there; a higher generated income can maintain the sale of low-cost items.
Dollar General is tactically placed in rural areas to increase sales amongst communities based some distance from alternative retailers. The company responds well to demand, utilizing profits to expand its reach and cater to a growing demographic.
The business increases its ability to sell privately-owned brands and operate personal transportation. Dollar General saves on hefty bills by scaling down shops and reducing the employee base. Management of low outgoings allows the company to continue supplying affordable goods.