Dollar General Case Analysis

1059 Words Mar 14th, 2014 5 Pages
Intuitively one might assume that Dollar General, the well-known extreme-value retailer, has an established competitive advantage versus other consumer goods retailers with respect to price. It would then follow that cost would be a defining characteristic of the company, and a cost analysis an appropriate analytical tool. However, the four distinct types of retailers within the dollar store retail segment (original dollar stores, close-out retailers, limited assortment grocers, and extreme-value retailers) all compete on price. Dollar General is very competitive in this regard, but this alone has not rendered the company successful; price is not Dollar General’s competitive advantage amongst its competitors. Therefore, a …show more content…
I would suggest the company to carry out the following actions. First, the company should seek limited expansion within the continental United States (US extreme-value industry still growing at $1.5 billion/year), namely into California. However, expansion should be limited to this state only. Whereas development within the US had been the company’s growth engine for years, the company is now closing and remodeling stores with equal returns. As such, the company’s growth aims should be moved abroad (Europe), where extreme-value markets are well received, and stores with limited SKU’s fair better than larger discount outlets. Secondly, store merchandise productivity could be enhanced by eliminating seasonal items (costumes, summer toys) and adding more strategic grocery items. Research suggests that same-store growth could be spurred by a heavier emphasis on fresh grocery items, and Dollar General appears to have the delivery capabilities to keep a fair supply of perishables on hand. A slightly larger store size for new shops might be necessary for this sort of development, as Dollar General seems to have slightly underestimated the ‘sweet-spot’ for its store size with the current store model. The stores would remain small enough to facilitate accelerated shopping, but large enough to hold a proper number of SKU’s, still in the
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