Dollar General Essay

bingle dollar bill commonplace is the scating dollar lay in retailer in the linked States with 2011 unprocessed r tear downue revenues of $13 billion. It evolved since 1939 from a family (Turner) owned business to a publicly-traded company to a de-listed private investor-owned company in 2007. In 2008 Mr. Rick Dreiling, the current chief operating officer and Chairman of the Board, began to steer the company in bracing directions.The operating priorities were to generate productive sales growth, growth gross margin, improve processes and information engineering science to reduce be, and strengthen the dollar world(a) culture of serving other(a)s. long horse ecumenical began to see to it a decline in sales and storage amplification as early as 2005, prior to the recession of 2007. As a leader in the labor, with its primary products being downcaster- worthd consumables, buck public turned around under the parvenue-made leadership and ownership expression to again begin increase gunstock enlargement, sales and prospects for increase revenues and profits. At the present time one dollar bill everyday pay strategic give of its heart and soul competencies leadership under the CEO, product selection expertise in product sales, their organisational style and structure, the power of the retail store cooking stove and dissemination centers and a quality shop pay back to move ship towards achieving their operational priorities. However, sawhorse prevalent faces challenges that ar both internal and external.They throw off knockout leadership just now with 10,000 stores leadership, culture, and encourages be hard to effectively trickle down with the whole organization. Improving the customer experience embarrasss having richlyly motivate employees with a corporate culture of service. horse commonplace has succeeded, in part, be crap they persevere back sought out commercialises that the big box companies ilk Wal-Mar t do non target, at least by a little scale easily entreeible store in c stomach law of proximity to consumer homes. This means, however, that the primary merchandise of the company has tradtionally been in depleteder in come about neighbourhoods it suits the price mavin of consumers and aligns with starter priced commercial real estate. It is an irony that Dollar ordinary has prospered during the bargon-ass-fangled recession. They must strategically align their core competencies with the external free-enterprise(a) environment, and this result include a need to possibly shut down gravely performing stores at the like time as they seek novel store expansions. These priorities will be surmount served with a strategy of expansion of racyer(prenominal) concentration of stores in existing successful grocerys, and setting up stores in bran- refreshful atomic number 18as wise markets within existing states and impudently states with pocket-sized or no current pr esence of Dollar popular Stores. mental hospitalDollar General Corporation is the largest displace retailer in the coupledStates, the company offers consumer staples merchandise in four categories consumables, home products, seasonal, and equip. As of February 25, 2011, Dollar General operated 9414 stores located in 35 states. Dollar General was founded in 1939 by J.L. Turner and his son as a whole-sale business. The first Dollar General store which is likewise the first dollar store in the States was opened in 1955 in Springfield, Kentucky. In the rest of this report, we will panorama at what happened to the Dollar General these years and make water a all-round(prenominal) abridgment of the company, which include the external, internal and SWOT analysis. excessively we will result several strategies recommendations to keep the company in the good path. psychoanalysis of the away EnvironmentIn order to analyse the external environment of the drop retail industry, we c onducted PEST analysis (see exhibit 1) and Porters phoebe bird Forces analysis (see exhibit 2) of the industry and these methods of analysis deliver allow ined us to come out several near big opportunities as well as threats of the entailment retail industry. First, there argon several opportunities within the deduction retailer industry. With the uncertainty of saving within the U.S., discount stores be getting much popular as consumers ar liner the situation of write down get power. Lower income neighbourhood would very be the i spate place for discount retailers to demonstrate their marketing strategies and to locate their stores. Also the use of engineering flush toilet really improve their operational efficiencies. At the same time, there are several threats that the industry is facing. From the political aspect, there are trading issues surrounded by U.S. and countries where the retailers are trade merchandises, high school tariff brings down the profits for companies. Also, the quick growth of online-stores raised the competition within the discount sell industry. intensive competition within the industry resulted companies constantly reducing prices and profit margins.Analysis of the Internal EnvironmentValue Chain Primary ActivitiesDollar General (DG)s inbound logistics consist of offering consumable, home products, seasonal and apparel merchandise from various suppliers. They in like manner have stores located in to a greater conclusion varied states to take emolument of captivateing more than customers. DGs stores are either in freestanding building or in cutting shopping centers to save on building bells.For outbound logistics, Dollar General hires troika-party trucking companies to complete deliveries. The trucking companies transport the merchandise to a store from their nearest distribution center. DG also installed a spokesperson plonk system in the distribution centre, which allows employees to communicate with warehouse software systems by speech recognition. This would make the distribution cost go down for DG when the fuel cost increased.Dollar General operates its stores in chartered quadriceps and also in their owned stores. This allows them to lowers their limited maintenance capital, low tenancy and operating costs. DG keeps building sunrise(prenominal) stores and constructs its stores to make them easier to shop and increase stores sale productiveness. DG also tried to make its stores look standardized across the chemical chain.Dollar General has its own marketing which focuses on four variables Price, Place, professional personmotion and Product to allow the company to attract existing and new customers. They create value through various products by increase private labels products in consumables and non-consumables and through galore(postnominal) stores across different regions to bring their reputation to their market. Having newspaper inserts and a weathervane site allow DG to increase their put up image nationally.Dollar Generals service is done efficient and effectively by stave-scheduling model. This system would help to ensure the staff available at different times to the level of sales volumes during the week. DG provides fostering to their employees and focus on how to recruit and retain their high-performance employees. Value Chain Support ActivitiesDollar Generals tauten infrastructure has Richard Dreiling as CEO and head of the jury. He previously was the CEO and board chairman of the largest drugstore chain in smart York City. He is experience and knowledgeable in the forage and drug retailer industry. Under his leadership, there arefour important priorities identified by the give carers, which are driving productive sales growth, increasing gross margin, improving processes and information technology to reduce costs and strengthen the DG culture of serving others. Each typical store has one store manager, one assistant manag er and terce of more sales clerks.Dollar General has great humankind resource management. They employed more than 85,000 full-time and part-time employees. They have focus on how to improve recruiting, training and retained their employees.Dollar General has great technology and development. They installed a express pick system in the distribution centre to decrease the distribution cost due to high fuel cost. They also installed new uninflected and monitoring tools to assist with inventory shoplifting reduction efforts. This would avoid them from the sacking of merchandise due to shoplifting, employee stealth, damage and obsolescence and allow them to increase gross margin. to a greater extentoer, having a web site to allow customer to place orders online is a nonher technology for DG to bring customer to store.Dollar Generals procural is by purchasing merchandise through various suppliers, importers, agents, and other third parties. DG offers shuffle name, consumable merch andise and private label brands. DG also uses direct sourcing to get products to their store in order to maintain costs and increase its gross profit. They also held licenses to provide various trademarks and brands to the stores. sum competencies (Appendix C pageBased on VRIS framework, we have identified cinque core competencies of Dollar General. These core competencies are Richard Dreiling (CEO), consumable merchandise, benchmark organizational styles and their retail stores chain. The separate evaluation of to each one of these competencies arse be observe in Appendix A. SWOT Analysis potencesDollar General is considered to be the largest retailed stores for selling merchandise mix priced at $1 or slight in the US with more than 9400 stores in35 states as of February in 2011. They sell consumable products at a very low price which attract more discount shoppers during recession. Their marketing strategy on 4Ps allows them to attract more and new customers. DG has the abi lity to catch market trends and ready their product mix accordingly. They also create a fast and contrivance shopping experience for consumer. They also have a very strong financial since they leased most of their stores and purchased leased stores during weak estate market result. in that locationfore, they have very low cost on capital expenditure. Their staff scheduling model allows them to make sure employees available during peak time. Also, the voice pick system in the distribution centres helps them to reduce distribution costs dramatically due to increasing in fuel cost. Moreover, the standard be after in each of the retail store has helped them to increase sale productivity and easy to shop for customers. WeaknessesDollar General has many weaknesses in its operations. They have to hire third party truck to deliver most of their merchandise, which could lead to delay in delivering merchandise to stores since they do not have accommodate over the trucking companys opera tion. DG has initiative to remodel and renovate their existing stores which could dramatically increase their debt because they have over 9000 stores. Also they are late on introducing online orders in 2007. As a result, they could lose on bringing more customers to know about their brand image. Their human resource management is problematic because they did not have clear indemnity on overtime pay and inequality salary due to gender. This could cause their reputation badly and financially hurt as there were cases where employees sued them over those issues. SWOT MATRIXFor the SWOT matrix, we have dogged several things to be of importance in the following tableSWOT MatrixStrength1. Low operating cost model2. Large scale in term of retail stores3. Strong financeWeakness1. High cost on capital structure due to renovation2. Late on introducing online order program3. HR management is inefficientOpport wiz1. stinting uncertainty helps dollar stores2. Low income Neighborhood3. Use of te chnology1. entryway global market(S3,O1)2. Attracting more customers from different income groups(S2,O2) 3. purifyment on operational structures(S1,O3)1. opening new stores during economic downturns(W1,O1)2. Upgrading online-order program(W2,O3)Threat1. National trading issues2. Rise of online-stores3. intensive Competition1. add-ond market share reduces the competition(S2,T3)2. Financially healthy helps keep online operations(S3,T2)1. Redesigning online-store for break out shopping experience(W2,T2) 2. Transferring cost on capital structure for merchandise mix(W1,T3)Assessments (Appendix D pageThe mission statement at Dollar General is, Serving Others. For Customers pinchvenience, Quality, and Great Prices. For Employees Respect and Opportunity. For Shareholders A Superior Return. For Communities A punter Life. Based on our evaluation of this mission statement, we came up with a resume quality score of 71% (Appendix B page We matte up in the mission statement that the purpo se of Dollar General, go/ products offered, their competitive advantage, how they do to survived, how they treatcustomers and positive public image to stakeholders are clear outlined in the mission statement. Dollar General does not ensnare what their scope of operations is, does not create a shared sense of value among employees and does not explain the technology or innovation in their operations. Dollar General definitely has a strong mission statement, but could improve on a few aspects to make it better. Objectives of Dollar General are to increase market share in product and services, achieving high technology in operational processes and boosting companys reputation by serving others. The company managers under CEOs leadership drafted firms corporate governance principles.Dollar General has a board of directors and CEO is the chairman of the boards. Rick Dreiling, CEO, has extensive knowledge and experience in food and drug retailer. DGs Top Managers are do up of local st ores managers who allow firm to discern directions for the whole company. This helps for tighter unity among the upper and lower level managers within the firm. Strategic Alternatives1. Uniform stigmatization and Functional/Facility DesignDescription Create uniform signage, logo, brand uniformity, including greater internet presence. Apply across advertising and promotion mediums. standardize store (floor & shelf) layout, and build private store products under improve brand efforts. Pro Increase the square footage of sales (e.g. 10,000 sq ft building 60,000 sq ft sales area) Pro Create uniform, time-saving shopping experiencePro Improve and standardize surveillance to reduce shrinkage from theft (large part of theft from employees) Pro Increase sales per selling s footprintPro Increase profitability through higher margin building of private store brand Pro Store brands manufactured through low-cost east Asia manufacturers under private label check Most stores are leased har d to find uniform size, shape, etc. Con National brands lifelessness a consumer preference in many groups (such as higher income) Con Private branding or brand building may not be as important to value-conscious price- calculaten consumers2. Human Resource Development More Managers, Assistant Managers, Performance Bonuses Description One of the goals of the company is to offer higher living standards to employees. More managers and assistant managers allows for non-hourly monthly hire, with base salary plus profit bonus potential. Pro Reduces high staff turn-overPro Reduces shrinkage from staff theftPro Increases productivity and customer service (e.g. lag more willing to rotate stock and presentation such as for seasonal goods or lowering and strategically placing stock that is shelved Con may be perceived as offering a job backup without wage increases Con Increases expectations of staffCon Could lead to higher wage costs, reduced net profits (if profit sharing), need to of fer benefits (health insurance) Con Less flexibility with part-time employees and cyclical/seasonal trends3. Expansion to young States/More StoresDescription Plans are underway for expansion to states such as Connecticut, New Hampshire, Nevada. Presently they are in 35 states states like Arizona, Colorado, Delaware, manganese and Maryland all have less than 100 stores. A study business and population state like New Jersey plainly has 44 stores. New stores derriere be added to existing states because of local market (3 to 5 mile radius of stores) in all areas city center, suburbs, remoteming(prenominal) areas. Pro Resumes a past successful approach to refineed sales revenues and profits Pro Shutting down of unprofitable stores, and new strategies, better suited to expand Pro Recession has created many low-cost retail lease opportunities Pro Many of the highest density states with most stores in scurvy southern areas major markets like New York state, Colorado and others are g reatly under-served. Good opportunities. Pro Regional distribution centers gain economies of scale and other efficiencies with enough stores target areas with less-stores-per-distribution ratio Pro Company has built high capability and advantage in low-cost store openings Con Leases, even at lower prices, generally involve 10- to 15-year commitments Con Recession tacit may be affecting employment, incomes andsales patterns Con Very low brand familiarity in new statesCon Threat, although small, of taking business away from other Dollar General stores if in higher per-city concentration4. stigma Higher Income ConsumersDescription Higher income consumers have been shopping more at stores like Dollar General. This does not have to be solely for increasing purchasing power during recession. Many people of all incomes enjoy value shopping. change magnitude focus on higher income consumers end be by increasing traffic to existing stores or new stores in more affluent areas. Higher inco me consumers may also have greater access to home computer, internet and preference for internet shopping. Pro Increase per-customer total spending per visit, a main goal of current strategy Pro Higher income consumers have means and ability to travel further higher opportunity cost for their time though Pro Allows for greater find to sell national brands and higher price (closer to $10 range) goods Pro Increased revenues and profitsCon Costs more to advertise/promotion to this new target audience Con External advertising is more pricey and difficult to measure directly Con Setting up stores in more affluent areas will have higher land, taxes, lease costsRecommendation Alternative 3 Expansion to New States/More Stores writ of execution PlanThe first step in the expansion plan is to identify the two paths of increased store results (1) more stores per established markets and (2) new stores in new markets.(1) More stores in established marketsEstablished markets have the advantag e of useful sales statistics. Each area can be analyzed in basis of the total number of stores in an area, stores and sales revenue per population in the city/region, and total number of stores, including competitors. These areas have already experienced within or intra-area exapansion. Impacts of higher concentration can be estimated. These patterns should be duplicated where possible seeking an optimum level of stores in a market. One of the great advantages the company enjoys is that most sales come from within 5 miles of an outlet. Even in cities with a high number of Dollar General stores, there remains a great deal of available market zones. (2) New Stores in New MarketsSelecting new states to expand to and create new market presence can be channelise by existing and planned distribution centers. Distribution centers are describe to streamlining a uniform system of inventory and logistics. For example, relatively new states with a lower density of Dollar General stores but with an existing under-utilized distribution center, with profitable stores, is the key criteria for new market selection. Other market analysis for new city/state markets can follow the patterns that have prove most successful in recent (past decade) expansions.Not all of the alternatives are mutually exclusive. The expansion to new stores and new markets more easily facilitates other goals such as improving store design and layout improving shopping speed, access to goods and higher density shelving use. These are tactics easier to achieve when selecting new properties than in remodelling existing buildings. Setting up new stores in new states may also be an opportunity to try out new labor-relations, including altering the mix in the midst of management (salary) positions and wage positions. However, to assure the most flexibility new stores and markets should begin with experienced store managers with wage employees. When new stores are in or near existing stores and markets i t offers the chance for promotion of existing employees.The strategy is not simple expansion in terms solely of increased added store numbers. The strategic goal is to expand to new profitable markets and this includes the ancillary actions such as monitoring and closing worthless performing existing stores. This blends opportunities while overcoming weaknesses towards higher profitability and sustainability.Implementation pace and schedule.With nearly 10,000 stores, and average expansion in the years amongst 2004-2009 inclusive being 354 stores, there are no simple decision criteria for selecting the best number for expansion. At the early part of the six year period (2004-5) expansion was by more than 600 stores per year. After a dip and long-play growth in 2006-8, new store expansion grew to 466 stores in 2009. The bug out of this is higher concentration in existing state markets.Expansion to new areas should be in areas such as New Jersey, New York (state more than city due to high real estate costs in city) and other Northeast states which may be served by distribution centers. There is no current northeast distribution centers at all. Nearest regional centers are in Ohio (1229 stores) and perhaps Indiana (1000) stores. Over the next three years the pace and location of new stores in new markets should be 200 stores per year in the Northeast Atlantic coast area. paygrade CriteriaThrough all stages the evaluative measure will be the extent to which performance matches the operating priorities driving productive sales growth, increasing gross margin, improving processes and information technology to reduce costs, and strengthening the Dollar General culture of serving others.ConclusionDollar General was the first removal firm in the discount consumer merchandise stores an industry that has become mature, though chronic to find new ways to reshape itself or be influenced by world trends or forces. With a primary focus on low prices (many items in the $ 1 range and more established name brand products value priced with competitors like Wal-Mart) Dollar General has responded well to the low-cost ware from countries like China and other emerging South-East Asia manufacturers. It has a high percentage of total products in national brands, but the majority of its products are private brands, including their own store brands. The strategic choices of Dollar General for the most part involves duplicating the sourcesof their per-store success at a level encompassing nearly 10,000 stores in the United States. Dollar General has followed a strategy of rapid expansion of stores which has been successful except for a net closing of stores in 2007, and a slower pace of growth in the years 2006 and 2008. Through the expansions, and restructured, and improved information systems and logistics, Dollar General is poised to achieve both increased number of sales and greater net profits.ReferencesDollar General- Todays Neighborhood Store by Sue Cu llers, Buene Vista University and S. Stephen Vitucci, Texas A&M University-Central Texas. Dollar General 2013 Annual Report by Dollar General. edge 1PEST AnalysisPolitical The level of political perceptual constancy of the country is important to the consumer staples industry. Changes in government can lead to changes in taxation and legislation. The American elections may have an effect on the retailing industry as new legislation or new or existing government may bring in taxes. Also, trading issues between the US and other countries will affect retail companies when they are importing merchandises, higher tariff would resulted in decreasing profit margins for discount stores. economical The consumer staples industry is unique as it considered non-cyclical, which means it does not affected by traditional business cycles or economic downturns. The demand for consumer staples is always consistent as it has a low price elasticity of demand.Furthermore, discount stores practicall y have recorded increased sales and income during recession. While their usual customers suffered from unemployment and lower purchasing power, people from higher income brackets found their way to dollar stores, look for bargains. Social Where income is distributed is an important factor that companies should look at as this also demonstrates the ideal place to aim their marketing or to locate their stores. price reduction stores always targeted their merchandises assortment and store locations to meet the shopping needs of value-conscious customers. With the economy still remains weak anduncertain, major dollar stores sought to keep their traditional customers and attract new customers. Technology Use of upgraded technology of cashing machines can improve operational efficiencies. Also, integrated and sophisticated IT system would provide managements to manage their inventories efficiently and keep costs low. The rapid growth of online-stores raised the competition within the discount retailing industry.Exhibit 2Porters 5 Forces AnalysisThreat of New Entrants (Low)The overall threat of new entrants in the discount retail industry is low. New entrants are facing many barriers in this industry. Top companies control the major portion of market share. Economies of scale play an important role in this industry as large companies have their cost advantage and offer their customers with lower prices products. New companies do not have much capital and resources to compete with them. negociate Power of Suppliers (Low)There is not much bargaining power for the suppliers include manufacturers and distributers. Large discount retailers purchase merchandises from many different suppliers so they are not relying on a sole supplier. Also most of the supplies are not rare or blue-chip. So the suppliers power in this industry is low. Bargaining Power of Buyers (High)The bargaining power of buyers is high within this industry, and this is due to customers are highly p rice sensitive, with low brand loyalty customers are just seeking for products with the best values. Also, in the discount retail industry, the exchange costs are very low, customers can easily switch between stores depending on which store has the cheapest products. Threat of Substitutes (Low)The threat of substitutes is low in the discount retail industry and this is due to products are already on the low end of pricing scale and the products offered by different dollar stores are almost the same, and the essential products are difficult to find substitutes. Rivalry among alertCompetitors (High)The competition within the discount retail merchandise industry is really high between several big players such as Dollar General, Family Dollar and Dollar Tree. Other than that, these companies are also competing with some gargantuan retailers like Wal-Mart. Since the low-cost leadership is essentially the only competitive advantage within this industry, retailers are constantly reducin g prices and profit margins to try to drive traffic to their stores and increase sales.Appendix C Core competenciesWe have determined that Richard Dreiling is valuable, rare, costly to imitate, and non-substitutable. Richard Dreiling is valuable and rare because not many CEOs have the leadership abilities to take Dollar General as far as he did. Further, Dreiling is costly to imitate and non-substitutable because a CEO of his timber is very hard to find among CEOs in the same industry. Consumable merchandise is very valuable because of the four categories that Dollar General offered, sales in consumable increased most rapidly during recession. This merchandise is not rare, costly to imitate and non-substitute because competitors can copy your merchandise by observing what your stores offer to consumers. Further, benchmark organizational style is another core competency. Benchmark organizational styles are valuable and costly to imitate because they patch up an organizational struc ture that your competitors have difficulty mimicking. This organization style is not rare and is substitutable because competitors can copy your business model by observing how you operate as a firm.Retail stores chain is valuable and costly to imitate because Dollar has numerous of stores chain across the state, each store has been redesigned to specific standards to make it easier to shop and increase sale productivity. They also owned some of the leased store during the weak real-estate market, which is difficult for competitors nowadays to own its retail stores. These retailed stores chain are not rare and non-substitutable because competitors can copy their design and build their stores as same as DG did. Shopping experience is valuable, rare, costly to imitate and non-substitutable because Dollar Generals stores has providedthe marketing strategy 4Ps which allows them to differentiate from competitors on how consumers buy their products, how the stores designed and how the se rvices they has to offered in such a fast and convenient way for consumer to shop. This experience is something that competitor cannot obtain by using money and copy from DG stores.