Dollar General

Dollar General, which has been operating since 1939, is a low cost extreme value retail store. They operate small size discount stores that offer a focused assortment of basic consumable merchandise. The operating and merchandising strategies at Dollar General are designed to target the low, middle and fixed income families. CEO, David Perdue, and his company are strategically positioned in 35 states excluding the west coast and are often found in communities with populations of 20,000 or less. Dollar General’s low cost business model (small stores, limited staff, and low cost advertising) align them in direct competition with other low cost retailers such as Wal-Mart, Target, and other supercenters.

The fastest growing domestic retail channel over the last decade has been the dollar store industry. In 2007, Dollar General’s annual net sales of $9.2 billion placed them at the top of the dollar store category of discount retailers. From 2003-2007 the company has grown from 6,273 stores to 8,260 stores. This unprecedented growth rate has also created several challenges for David and Dollar General and critical decisions in strategy must be made.

The following are several recommendations based on my overall evaluation and analysis:

• Dollar General should focus its efforts on 2 primary growth strategies:

o Focus on existing stores and look to drive growth through merchandising and in store operational improvements.

o Remaining within the current footprint and grow through industry rollup.

• Dollar General should not deviate from its low cost business model and simultaneously venture into both the big box market and small box market.

• Dollar General must strive to grow and streamline efficiencies with technology and the target consumers via the internet.

Analysis

Strategy is a choice. David Perdue, CEO of Dollar General, has found significant progress and growth in the dollar store industry; however, crucial and challenging choices lie ahead. Dollar General has been the fastest growing retail channel throughout the United States over the past decade only trailing supercenters such as Sam’s Club and Costco. Just in the short duration that David Perdue has been spear heading Dollar General’s efforts (2003-2007) the company has grown from 6,273 stores to 8,260 stores. Revenues during this period have also increased $9.2 billion, representing a 9% cumulative average growth rate. This unprecedented growth rate has also created several challenges for David and Dollar General. The company had to close 200 low-potential stores and write off a significant amount of old inventory that accumulated.