The dollar general company, which firstly established the concept of “one dollar”, is one of the dollar stores in America. Dollar store targets at consumers ranging from 55 to 64, who pinch pennies, cannot and don’t need to get into the high-end market because of their low income. Dollar store is selling daily necessities, simple clothes, food, toys, etc. The price is always lower than 10 dollars. Dollar store always minimizes their cost on labor and advertising. Meanwhile, they only provide a certain categories of goods and adopt a simple products’ display form.
When the dollar store first came into the market, it didn’t pose threats to the existing big supermarkets like Wal-Mart and Kmart, as it seems that dollar store doesn’t have any business overlap with them.
At first, most dollar stores were found in suburbs in southern and eastern America, where the population scale in these districts was small and couldn’t afford the big supermarkets and big discount stores. Accordingly, dollar stores occupied the market that big supermarkets cannot take into account. With the growing number of multiple shops, dollar store began to enter bigger districts and even those with Wal-Mart already. Using its convenience and price advantage, dollar store became the flourishing business around the world.
Dollar store has low gross margins, small target markets, and simple products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics. The concept of dollar store can be understood as a disrupt innovation for retail giant. It targets at low-end customers who are beneath big supermarket’s attention.
Supporting information: