These Stores are Multiplying
A Threat to the Big Box Stores
Prices Often are Higher Than Walmart
The actual price you pay for a given item may look cheap, but the price per unit is often not as good as the Walmart price. The dollar store sells smaller packages of the same thing. You pay less because you get less product. The Walmart price per pound or price per unit of volume is often better for the same brand when compared head to head, but the “bargain” store sells smaller packages.
Wholesale Closeout Purchasing
The dollar stores often buy in bulk items that the manufacturer or wholesaler wants to dump or unload. If the manufacturer or wholesaler can’t sell their inventory of a product line to the full price stores, they are often willing to sell large bulk inventories to the dollar folks. It’s similar to a giant garage sale, the wholesaler with the giant inventory needs to move it and the dollar retailers are happy to oblige by taking off their hands. Manufacturers of cheap consumer items like party supplies, plastic toys, snack foods and paper goods often have a problem with excess inventory. The dollar stores offer a solution to the problem.
Niche Sales Items
The small bargain stores have a niche marketing strategy for certain categories of goods. The dollar stores are a major seller of party supplies, snack foods and party favors. They also sell a lot of inexpensive toys and home décor items. The dollar sellers aren’t trying to be all things to all people along the lines of Walmart or Target. They concentrate on what will sell for their market.
Another niche type strategy adopted by the dollar stores is to focus on convenience. They aren’t trying to be your source for a whole shopping cart full of grocery products. Almost no shoppers make them the “go to” source for weekly shopping. Instead, the bargain retailers try to capture as much “fill in” shopping as possible. Even if a Walmart is close to you, going to the large store and navigating through the giant parking lot may be too much if you’re looking to buy one or two things. The dollar store makes more sense for a small purchase.
Many of these stores are now free-standing with small parking lots. You can get in and get out quickly. A quick Walmart visit is tougher to carry out. With a free-standing dollar store, you can often park in front, jump in the store and get out very quickly. The convenience is a virtue of this genre of stores.
Location, Location, Location
Taking Away Drug Store Market Share
The tag words for real estate marketing are definitely applicable here. The dollar retailers are
Walmart and Target Too
Walmart has traditionally been more of a rural retail store. Retailers in smaller towns hate them because they take away customers for just about everything. While there are dollar stores in smaller towns, the growth of $1 marketers more recently has been in more urban areas. The idea is to have locations convenient to high traffic areas, particularly bus routes, so customers can get in and buy a few things on their way home from work.
Walmart is trying to delve more deeply into urban areas, but opening a Walmart store takes much lead time and requires quite a bit of land. Both of these factors make urban expansion for Walmart more difficult. The dollar retailers can use smaller parcels of land that are
If imitation is the sincerest form of flattery, then the big box retailers are definitely flattering the $1 store chains in a large-scale way. The big boxers can see the threat to their business is not merely on the horizon, the smaller discount chains are starting to eat their lunch, and dinner too.
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