Dollar General

 
 
 
 

Vocabulary

retail	range (2)	country (2)
at least	location	announce
brand	strategy	brick-and-mortar (2)
shrink	opposite	operation (2)
decade	touch (2)	conversation
sort of	grocery	notice (2)
limit	selection	perishable
variety	confront	household
locker	refine (2)	relatively
impact	rebound	customer
rural	shutter	across (2)
hire	block (3)	significant
worth	vice (2)	complimentary
option	provide	produce (2)
cereal	terrified	supply (2)
owner	compete	figure out
pork	monitor	moratorium
hurt	strange	pocketbook
drop	flirt (2)	councilor
offer	majority	minority (2)
fresh	apply (2)	collective (2)
local	discount	community
vote	point (3)	vote with pocketbook
income	chain (2)	work out (2)
urban	recession	shut/shut/shut
district	oversee	shut down
public	target (2)	overwhelmingly
hardly	respond	fight/fought/fought
wallet	approval	presumably
corner	seek out	around the corner
cooler	track (2)	particularly
trend		keep in touch

 
 
 
 

Video

 

 
 
 
 

Transcript

Retailers around the country are shuttering stores, a list that ranges from Toys-r-US, which just announced its closing or selling all its US locations, to brands including Footlocker, J Crew, and Macy’s that are shrinking their brick-and-mortar operations.

But one retailer, Dollar General, is doing just the opposite: opening store after store and markets that no one else will touch, and making a lot of money doing it.

David Procter, Kansas State University: “I would say that maybe twenty percent (20%) of my time is on the road, visiting grocery stores, having conversations with owners.”

David Proctor has spent the past decade studying small-town grocery stores in Kansas.

David Procter, Kansas State University: “We sort of feel like we know them and they know us.”

As a researcher, he tracks sales, monitors trends, and keeps in regular touch with grocers around the state.

And lately, they seem to want to talk about only one thing: the rise of Dollar General.

David Procter, Kansas State University: “Before you even get to the actual town, you are confronted by this visual of a Dollar General store.”

When we visit these small towns, that’s one of the first things we notice.”

Dollar General isn’t new: the discount dollar store which carries household goods, dry goods and a limited selection of perishable items like eggs and milk, has been around since the mid-1950s.

But in the last decade, the company has refined its strategy. It’s targeted parts of the country that were slow to rebound from the recession. Low-income, rural communities that other large retailers — even Walmart — won’t touch, and it’s done it while building stores faster than ever before.

Dollar General has opened more than five-thousand (5,000) new locations across the US, since 2010. It now has more than fourteen-thousand (14,000) stores across the country, or just about as many as McDonald’s and Starbucks.

David Procter, Kansas State University: “At least on a weekly basis, we get emails or calls from some small town, saying that Dollar General has been in town, and our business has suffered or Dollar General is getting ready to move into town.

Can you help us figure out a way to respond to that?

And so it is having a very significant impact in rural parts of Kansas.”

Dollar General told Vice News that their stores often provide “a complimentary option to other retailers that retailers that may sell items such as produce and meat.

But supermarkets don’t make most of their money from fresh foods; they make it from stuff Dollar General sells, things like cereal, soup and pasta.

So when Dollar General comes to town with a cheaper supply of those products, it’s a big problem for grocers.

Journalist: “When people call you, what do they say?”
David Procter, Kansas State University: “They’re terrified. I mean, the owners are. And they’re angry. They don’t know what to do about it.”

In Haven, Kansas, Doug Nech is closing his grocery store because he couldn’t compete with a Dollar General that opened a few blocks away.

Doug Nech, Owner, Haven Foodliner: “Well, this is thirty-seven thousand dollars ($37,000) worth of coolers right here between these two. This is full of pork. Bottom is full of chicken.”

Journalist: “Is it strange to see them this empty?”

Doug Nech, Owner, Haven Foodliner: “Oh yeah. Oh yeah. It hurts.”

Dollar General didn’t even have to put an announcement in the paper that they were opening a store here.

Doug Nech, Owner, Haven Foodliner: “And from that point on, we just started seeing a drop in sales, and we basically have lost a hundred customers a day for three years.”

Journalist: “So you’ve had a hundred fewer every day?”

Doug Nech, Owner, Haven Foodliner: “Every day. Seven hundred thousand dollars a day in less sales for a thousand-and-ninety-five (1,095) days.”

Journalist: “You know the exact number of days?”
Doug Nech, Owner, Haven Foodliner: “Oh, yeah.”
Journalist: “Where are you going to buy your groceries after the grocery store closes?”
Doug Nech, Owner, Haven Foodliner: “Not Dollar General.”

Journalist: “If a Dollar General is moving into town, and a lot of people are shopping there. What is the problem?”
David Procter, Kansas State University: “Dollar General is going to hire about maybe five or six people. Grocery stores hire on average, fifteen to seventeen.

The vast majority of Dollar General stores do not offer fresh fruits and vegetables. They don’t offer hardly any variety in dairy. They offer very little variety in bread. Most of them don’t have any sort of meat.”

Journalist: “Do you feel like these local communities are hearing this message?”

David Procter, Kansas State University: “I think a lot of them are not. Actually I think a lot of them are voting with their pocketbook.

This is what economists call a collective action problem: even though it’s in people’s collective interest to keep real grocery stores open, it’s in their individual interests to buy what’s cheapest.

And it’s worked out so well for Dollar General that the chain is planning to open another nine-hundred (900) locations by the end of this year. It’s also flirting with a relatively new market: low-income, urban neighborhoods, where its competition isn’t local grocers: it’s other dollar stores, like Family Dollar and Dollar Tree.

Vanessa Hall-Harper, Tulsa City Councilor: “We’re not saying shut them down, but we’re say, ‘look, we have enough’.”

Tulsa City Councilor, Vanessa Hall Harper oversees a district with ten discount dollar stores, and zero grocery stores.

Vanessa Hall-Harper, Tulsa City Councilor: “We’ve had two public meetings and overwhelmingly, the community said, ‘we don’t want any more discount dollar stores in our community, which is what they’ve said for years.”

When Dollar General applied to open a new location in her district last summer, she successfully fought for a six-month moratorium on new dollar stores.

But before the moratorium started, Dollar General managed to get approval for the new store. And it just opened this month.

Journalist: “Presumably, a Dollar General wouldn’t be building another Dollar General around the corner, unless it felt like there was a market for it. Do you worry that the community is kind of voting with its wallet?”

Vanessa Hall-Harper, Tulsa City Councilor: “No, well, not really because there’s no other options. If you don’t have an option, you can’t really count that as a vote.

That’s why I believe their business model is to seek out food deserts and communities that have no other options. And they can make it more difficult for other retailers to come in and be successful, particularly quality, full-service grocery stores.

How many discount dollar stores do you need in one community? In one community?”

 

 

Questions

1. The future is bright for most retailers. True or false? Is there a major exception?

2. David Proctor is a university professor who studies stock market indices. Is this right or wrong?

3. Is there a central theme among the business community in rural Kansas?

4. Are there lots of advertisements and billboards promoting Dollar General?

5. Dollar General is a new enterprise, only about a decade old. Is this correct or incorrect? Is it becoming a retail monopoly?

6. Does it target high-end, middle and upper-middle-class neighborhoods? What is their business strategy?

7. Does everyone welcome Dollar General, loathe it, both, in the middle? Do locals have mixed feelings about Dollar General, a love-hate relationship? Have politics been involved?

8. Explain the terms collective interest, individual interest, voting with pocketbooks (wallets)?

 

A. Describe the retail establishments in your community or city.

B. Has it changed over the years?

C. How do people feel about small, mom and pop shops and grocery stores versus supermarkets, hypermarkets, discount stores?

D. What might happen in the future?

E. Should people and governments do anything?