An interesting phenomenon in recent years is the rapid expansion of Dollar Stores. In 2013, Family Dollar planned to open an average of two stores per day. The pace accelerated for Dollar General in 2016 with 900 more stores, and in 2017 they plan to open a whopping 1,000 stores. Dollar General began 2016 with 12,500 stores and climbing.
These stores make money both by selling smaller portion sizes at a specifically cheap price point. If you actually work out the price per unit relative to mainstream stores, the mainstream stores are often the better buy in terms of volume. Regardless, they accomplish this through strategic relationships with manufacturers and packagers. One of the chains got their start by strategically buying products during factories’ quiet times to be able to buy them at a lower price. The stores also focus on generic products, rather than name brands.
While the store concept may be simplistic, there are a lot of subtle touches that make dollar stores successful. For one thing they typically follow the exact same floor plan, so that customers can expect a uniform experience. They also strategically place their stores in primarily low income areas, and carefully select the rural areas that they choose to operate in.
Dollar General distinguished itself from the other Dollar chains by partnering with NASCAR and IndyCar racers, further bolstering their brand.
Critics of the rapid expansion question if the growing number of stores is sustainable, and that it might breed more conflict between the various dollar store chains.
Sources:
http://www.atlasobscura.com/articles/how-dollar-stores-were-planted-in-the-south-and-bloomed-around-the-us
http://www.chicagotribune.com/business/ct-fastest-growing-retailers-0923-biz-20160922-story.html
http://www.forbes.com/sites/walterloeb/2013/06/10/dg-drtr-fdo-do-we-really-need-40000-dollar-stores/#267117f063da