Dollar & Other General Merchandise Stores Industry Overview

Excerpt from Dollar & Other General Merchandise Stores Report

The dollar and other general merchandise stores industry in the US includes about 33,000 retail outlets with combined annual revenue of about $50 billion. Major companies include Dollar General, Family Dollar, and Dollar Tree. The industry is concentrated, as these three companies account for nearly 60 percent of the retail establishments.

Competitive Landscape

Demand is driven by consumer spending, particularly among less affluent consumers, as most companies target the lower- to middle-income demographic. The profitability of individual companies depends on their ability to effectively locate stores, to maintain value in the eyes of the consumer, and to maximize their revenue per square foot. Large companies have advantages due to their ability to negotiate better lease arrangements for retail space, and lower product prices with manufacturers, vendors, and other suppliers. Small companies can compete effectively by filling a niche market or locating in a previously untapped market, as the barriers to entry are low; startup costs are estimated to be about $230,000 per retail outlet. The industry is labor-intensive: average annual revenue per worker is slightly less than $150,000.

Products, Operations & Technology

Major products are consumables (primarily food items), housewares, seasonal items, and clothing. Consumables are the biggest sellers, accounting for up to 70 percent of some companies' annual sales. Market share of housewares, seasonal items, and apparel varies, with each accounting for between 5 and 15 percent of sales, depending on the store. Store managers generally have the flexibility to order merchandise that is particularly relevant for one location. Some items are automatically reordered at each store.