Thread: The Dollar Store

Jms's thread here got me thinking about this.


How do dollar stores do it, how do they sell what they sell for that price?


An example:

I needed a toothbrush the last time we went shopping and since we went into the dollar store for a couple of other things I figured I'd see what they had. I'm not fussy, so I figured I could save a few cents by getting one here. For a single dollar I got an eight pack, and not some plain jane toothbrush but the curved shaped head with the multiple length bristle and rubber handled type. I figured "what a deal" and went on my way.

Then we move over to the normal discount supermarket where we do the rest of our shopping. I check on toothbrushes figuring their bottom of the line 8 pack would be two bucks or so. Their best deal was a 2 pack for three bucks, and the brushes looked remarkably similar to the ones I had just bought.

How can the dollar store charge 1/12 as much for the same product as the international discount retailer it shares a shopping center with?

Both products were made in China so thats not an issue in their price.

They charge what the market will pay. That's all really. There's no better answer.

My wife worked for a company that sells frames for glasses. They're produced in China (I think), the company designs them, orders them and the chinese company makes them and ships them out to the NL.

Now keep in mind that these are not cheap crappy frames for glasses. Not every store that sells glasses has these and when they do they cost around €150-€200 for one frame.

She told me however that the stores that buy from the company buy the frames for around €10 a piece.........how can they do this? It's what a fool will pay.

There's loads of markets where things like this are true.

There's a couple of slight distinctions to be made here. First, Walmart and CostCo type businesses... they're cheaper because they buy a limited or focused range of products in great volumes and work off the principle of economies of scale. Bascially, pile 'em high, sell 'em cheap. Which explains the fact that these stores are basically warehouses dressed up as supermarkets. I believe some businesses will only sell in bulk, thereby passing much of the savings onto the customers in the form of cheaper prices.

Then you have your dollar-stores. These are like the bins (sorry, garbage cans) of the retail industry. They take stock that no-one else can shift for next to nothing and sell for next to nothing. And much of it may have been imported from developing countries. In my industry (publishing) there are plenty of stores that sell what we call "remainders". These are books that have reached the end of their shelf-life (in terms of the market). No-one's buying them anymore. They're yesterday's books. Or books that have bombed big-time and the print run was set way to high, hence it's the "remainder" of the print run. Since publishers by definition cannot shift these titles anymore, and sitting in the warehouse they cost the publisher money, and would even have to pay someone to pulp them, it might make more sense to sell the lot for next to nothing to someone who believes they can sell for a buck.

A friend of mine works for Dorling Kindersley (the illustrated book publisher). One of his projects currently holds the world record for the biggest overprint in publishing history. When the Phantom Menace was coming out, George Lucas managed to persuade Peter Kindersley that the book of the film would be soooo big, sooooo huge, it would be worthwhile printing 12 million of them. They shifted only 2-3million, leaving an overprint of 9 million books! They were so embarassed rather than sell them as "remainders" and forever suffer the ignominy of seeing them in dollar shops for years to come, they pulped the lot. What a waste. I always remind my friend -- it wasn't his call (luckily that responsibility was shouldered by Kindersley himself), but it doesn't stop me from ribbing him about it. And that is why DK hit the wall and was gobbled up by Penguin/Pearson.

For every product you see in a dollar store, there's a story!

Many years ago, being between university and military service, I worked at a coffee roaster for a while. We produced no more than a dozen different coffees, but they were sold under a myriad of different brands. Exactly the same coffee was marketed for every thinkable type of customer: from the one that wants to buy the cheapest coffee available in a dump market, to the one that wants to by a luxury product in a gourmet store. Of course, there would be some pricing difference due to the more expensive packaging to the latter, and I'm sure that one would also have a larger marketing budget, but mainly they would price it in the upper range, just to lend it an aura of quality.

It's just one of those frustrations of excessive capitalism: in the old days, when you bought an expensive shovel, you knew you 'd bought a superb shovel. Nowadays, there's a huge chance you bought an overpriced piece of junk.

BTW, for me, shaving with a straight razor is such a great antidote for that kind of annoyances, It keep a man like me from driving completely berserk on the neverending sham our world has become.

yea those dollar stores can do it because they sell whatever they can get cheap. Alot of their mdse comes from stores going out of business, old stock, poison laced products (just kidding), and what was already said stuff other don't want and they buy in quantity so they get the stuff for almost nothing so they can sell so cheaply and still make a profit.

Originally Posted by thebigspendur

yea those dollar stores can do it because they sell whatever they can get cheap. Alot of their mdse comes from stores going out of business, old stock, poison laced products (just kidding), and what was already said stuff other don't want and they buy in quantity so they get the stuff for almost nothing so they can sell so cheaply and still make a profit.

Call me naive but I've thought of that a few times. I still buy my $1 Dove soap there though. Oh well.

Typical of Rip Off Britain, our Dollar Stores are Pound Stores ($2)!!

Gareth

The Dollar Store has very low overhead and very low expectations from customers. Have you ever seen a long line of customers wanting to return items at the dollar store customer service desk? I haven't, and not just because they don't have a customer service desk. Employees are few and low-paid, and there's very little upkeep anyway

Originally Posted by thebigspendur

Alot of their mdse comes from stores going out of business, old stock, poison laced products (just kidding), and what was already said stuff other don't want and they buy in quantity so they get the stuff for almost nothing so they can sell so cheaply and still make a profit.

Along with some overstocks, there are wholesalers from China that stock Dollar store inventory. This stuff is made in such quantity that it ends up costing a fraction of a cent apiece.

Bob

It’s a combination of posts above. One is obviously “what the market will pay”! The material to make a Nike hat costs about $.12. The hat sells for upwards of $25! Go figure. Shoes, under $5, they sell for hundreds. Second is the low overhead and finally a lot is old, unmovable merchandise. The funny thing is miss labeled or miss packaged stuff. Some is really amusing!