Dollar & Other General Merchandise Stores Industry Overview

Excerpt from Dollar & Other General Merchandise Stores Report

Companies in this industry sell a variety of merchandise including consumables and housewares through retail locations. Major US companies include Dollar General, Dollar Tree, and Family Dollar.

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 concentrated: the eight largest companies account for about two-thirds of sales.

Products, Operations & Technology

Major products are consumables (food items and paper and cleaning products), housewares, seasonal items, and clothing. Consumables account for up to 70 percent of some companies' annual sales. Market share of housewares, seasonal items, and apparel varies 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.