Secrets of a successful dollar store

Narrow aisles, merchandise stacked high, and managers on the prowl for bargains are among the must-haves being stressed by dollar store consultant Bob Hamilton in the NYT magazine. They're talking about a "dollar store economy" that appeals to a broader range of customer.

Hamilton pointed out that the aisles are about two inches wider than two shopping carts, which themselves are comically tiny, giving the buyer a sense that even a small pile of goods is lavish. Despite the dollar store's reputation for shoddy products, the mise-en-scène nevertheless suggests a kind of luxury, if only of quantity. "The first thing you feel is this thing is packed with merchandise," Hamilton said, pointing out the high shelves along the walls. Helium balloons strained upward, everywhere. Any empty wall space was filled with paper signage proclaiming savings or "$1" and framing the store's goods.


I called JC Sales, one of the big warehouse suppliers of independent dollar stores located south of Los Angeles, and talked to Wally Lee, director of marketing and technology. He agreed there was little room for error now. If I wanted to open a dollar store, I asked him, where would he suggest I locate it? "Right next to a Wal-Mart or a Target," he said. And how large should my new store be? "If you want to be profitable, start with an 8,000-square-foot store," he said. "That is the most optimally profitable among all our customers." Stores can be as small as 1,000 square feet and go up to 20,000, but Lee implied that there is practically an algorithm of size, labor and expenses -- 8,000 to 10,000 square feet is profitability's sweet spot. But it's not all science, Lee said. The very absence of a plan­ogram is the other advantage independents can have. "You need to have a good store manager who loves to talk to people," Lee said. "If it is a Spanish market, then it has to be a Spanish manager to speak to them to see what their needs are. If you don't do that, you'll never beat anybody else."

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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