1 / 23

The Industry: Discount Variety Stores

The Industry: Discount Variety Stores. Target- Add value through low prices but good quality. F ocus on the "shopping experience Costco- Membership only, wholesale , cross docking distribution, warehouse

xia
Download Presentation

The Industry: Discount Variety Stores

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. The Industry:Discount Variety Stores • Target- Add value through low prices but good quality. Focus on the "shopping experience • Costco- Membership only, wholesale , cross docking distribution, warehouse • Wal-Mart- Wide variety of items,, “rollback,” unique payment agreement with suppliers, warehouse • Dollar General- “in and out,” founder of dollar store concept, consistently low prices in a convenient, small-store format. Prices are low due to low cost operating structure and relatively limited assortment of products

  2. Discount Variety Stores Industry • Discount consumer goods market is highly competitive industry with respect to • price • store location • merchandise quality • assortment and presentation • in-stock consistency • customer service

  3. “Save Time. Save Money.” • Largest discount retailer in the US by number of stores • Goodlettsville, Tennessee • 11,000 stores • 40 States • Southern, Southwestern, Midwestern, Eastern US • Merchandise is typically $10 or less • Founded in 1939 • Stock publicly traded in 2009

  4. Product Types • Two brands: 1)High quality nationalbrands from leading manufacturers 2)Comparable quality privatebrand selections 10,000 SKUS/store 10$ or less

  5. How are they profitable? • Convenient Locations • Time Saving Shopping Experience • Everyday Low Prices on Quality Merchandise • Key items in a broad range of general merchandise categories • Most basic shopping needs are met in one trip

  6. Store Plan • 7300 square feet • Operated by a store manager, assistant store manager, three or more sales clerks • 63% stores n freestanding buildings • 37% in strip shopping centers • Low cost, no frills building with limited maintenance capital, low operating costs, and focused merchandise offering with a brad range of categories

  7. Business Model:Value and Convenience • Convenient locations “small box” • Easy “in and out” shopping format • Less cyclical model • Compelling value and convenience proposition • 23rd consecutive year of same store sales growth • Highest sales in 4Q • Loyalty factor • Profitably exists in all types of markets: • Markets with limited shopping alternatives • Profitably coexists alongside larger retailers in more competitive markets

  8. Net Sales

  9. Growth Strategy • Growing Store Base: Expansion in core markets and into new states • Opportunities: Improvements in:-stock positions, • Increasing same store sales • Expanding operating profit rate • Remodeling and relocation • Remodeled 592, 575, 504 (’12,11’,’10) • Plus conversion 82 (’12)

  10. Success • 23rd consecutive year of same store sales growth • Average net sales per square foot increased from $210-$213-$216 (‘10-‘11-’12) • Strong cash flows and investment returns while simultaneously low retail prices

  11. Customers • Reliance differs based on financial situation and geographic proximity • Fill-in-shopping, periodic trips to stock up on household items, weekly trips to meet essential needs • Attract customers by focusing on product quality and selection, in-stock levels and pricing, targeted advertising, improved store standards, convenient site locations, and a pleasant overall experience • Low to lower-middle-income target

  12. Suppliers • DG purchases merchandise from a wide variety of suppliers and maintains direct buying relationships with many producers of national brand merchandise • -P&G, PepsiCo, Coca-Cola, General Mills, Nestle, Unilever, Kimberly Clark, Kellogg’s, Nabisco • Maintain a limited number of SKUs per category (pricing advantage) • Private brands come from a diversified supplier base

  13. More about Suppliers • National brands: 8% and 7% of DG purchases in 2012 were from DG’s largest and second largest suppliers, respectively. • Private brands: Diversified supplier base. Directly imported approximately $765 million or 7% of our purchases at cost (11% of our purchases based on their retail value) in 2012 • Suppliers easily replaceable- “we would generally be able to obtain alternative sources without experiencing a substantial disruption of our business”

  14. Distribution • Stores currently supported by 11 distribution centers

  15. Employees • As of March 1, 2013 employed 90,500 full time and part-time employees

  16. Competition • Family Dollar, Dollar Tree, 99 Cents Only • Wal-Mart, Target, Walgreens, CVS, Rite Aid

  17. SWOT

  18. Risk • Economic Conditions • Intense Competition • Private Brands and Broad Market Acceptance • Disruption to distribution network or inventory • Rising fuel costs • Domestic and Foreign suppliers • Product liability and food safety claims • Lack of timely renovation/remodeling

  19. Porter’s Value-Chain Model Low Cost is Key

  20. Porter’s Five Forces Model

More Related