That's a pretty strong quote to bury halfway through the article.
I live all of 20 minutes from the article's location and drive through it twice a week on average (I live in Grove, OK)
DG's got several stores around here, and it's amazing on the placement of them to be honest. It isn't really just a "find a hole in the ground where there's no competition"
Dollar General (at least in this area) likes to plant a store in a location that is just outside of the city limits and soaks in a TON of business on the dynamic of "do I drive all the way in town for X, or do I make a quick trip."
Across the board, they aren't cheaper on a unit by unit cost, they just offer smaller amounts/package and sell for slightly less to give that perception.
One down the road next to me is always packed. They're just too accessible when the alternative is driving half an hour into town.
I think a lot of the appeal of Dollar General, in particular, is that they're selling name brand goods at reasonable prices, close to where you are. Instead of driving or taking the bus to the Kroger or Walmart, you can stop in at the nearby Dollar General. Their stores are more like Walgreens or CVS without pharmacies than like traditional "dollar stores."
Dollar Tree is a little bit different--they are a traditional dollar store, where everything is $1 or less and the offerings reflect that. You have to hunt for the bargains that are actually worth it, and some of their aisles have omissions that only make sense because of the price limit (like the tools section won't have hammers).
Ain't that the truth.
Sure, you can get a roll of aluminum foil for $1 at Dollar Tree, while a roll is $4 at Kroger. But the Dollar Tree roll is only 25 feet long, while the Kroger roll is 200 feet. And that $1 screwdriver in the tools section is made of chinesium and will either break or have the tip get warped if you have to use it on anything tough.
That all said, Dollar Tree is THE place to go for party favors. Gift bags for $1 when they'd cost me $5-12 anywhere else? That's a steal! I mean, sure they won't have licensed Disney/Nickelodeon/etc. cartoon characters on them, but I don't think even the kids notice.
Thats the first time I have heard of that. Using it from now on, thanks haha.
Both survive because they are convenient and close. I can get a gallon of milk 20 miles away at Walmart or ALDI for $1.00. A gallon of milk at one of these stores is $4.00.
I don't believe it's sustainable, and the more the economy becomes de-localized, the less it can be realistically sustained. I think small towns like this are in for further decline the more centralized commerce becomes. It saddens me to say this, but many of these small towns don't provide much for the current big company driven economy, so why should the big companies care?
I'm gonna need to see some sources to back up this claim.
If you can't/wont be competitive on price well the selectman better be your friend. When the selectman is your friend you need not fear competitors. Their site plans will be bogged down in red tape and bureaucracy.
> It doesn’t take a lot of capital to open a store
Real estate and labor is still a significant expense. Outside of unionized grocery stores, it's not like store clerks in New York City or San Francisco are making $25/hr.
But to even open a small convenience store you need to purchase tens of thousands of dollars in stock, plus have enough reserves to keep your store operating, able to turnover product, for at least 6 months of negative cash flow. This applies even if you're not franchising.
Basically, even in a rural area your startup costs are easily in the $100,000 to $200,000 range for a small store--at least for anything bigger than a bait shop. Plenty of people in rural areas could secure that kind of financing using mortgages, but once you factor in risk of failure and opportunity costs, you need a pretty significant pool of potential investors before you can expect one of them to take the plunge, and in rural areas the available pools are just too small.
Opportunity cost is a huge deal. Somebody with enough assets to secure a $200,000 loan _and_ who is prepared to lose it all, is probably going to see a significant cut to their earnings compared to what they could be making elsewhere. This is why you see so many immigrants as shop owners--their opportunity costs are effectively lower, by dint of them being first-time players in the local economy, than a native with equivalent assets.
Similarly, outside corporations have to answer to shareholders. Even though well-financed corporations could easily open more stores while still making a profit, such capital has more earning potential elsewhere.
The upshot of all of this is that 1) rural consumers pay significant rents for living in comparatively uncompetitive markets, and 2) theoretically there's ample opportunity for a philanthropic entrepreneur to improve the quality of life of a rural town by strategically opening small stores with more competitive prices. Indeed, professionals who retire to a small town and open a small store are often effectively doing exactly this. (Similar to how well-heeled spouses in large cities burn money on boutique shops, except compared to the retired couple they have less need to actually be profitable, or care about whether they'll put someone else out of business.)
My observation has been that they seem to carry the kinds of things that never expire -- high profit, low turnover, little spoilage. Lots of soap, spam and cornflakes, but you wouldn't find many fresh vegetables.
I go there all the time due to the convenience. It is a mile to Walgreens and a block and half to DG.
Just be sure to check dates on the diet soda as it is often old enough that the sweetener that is no longer sweet.
Edit:
The candy at DG is always top notch. No fear of sugar at the DG.
According to Kantar Retail’s ShopperScape, the average Walmart customer is a 51-year-old female with an annual household income of $56,482. Interestingly, that number exceeds the U.S. median household income by $4,500, as measured by the U.S. Census Bureau in 2013, which goes against the perception of Walmart as a low-end discount chain. Eighteen percent of Walmart shoppers earn more than $100,000 per household annually. And Walmart shoppers as a whole, actually earn more than Kmart shoppers.
https://www.ama.org/publications/eNewsletters/Marketing-News...
If 99% of the world would swap places with you economically speaking how on earth do you get to call yourself poor?
You are right, I didn't know the median income moved so much last year.
US Median income = 59,039[0] = the top .2% globally[3]
Average US Worker Pay = 44,148[2] = the top .43% globally[3]
[0]http://www.businessinsider.com/us-census-median-income-2017-...
[2]https://www.thebalance.com/average-salary-information-for-us...
[3]http://www.globalrichlist.com/
"Access to healthy food, healthcare, housing, quality education, etc. are all diminished for low-income people."
And non existent for most of the planet.
EDIT: In regards to the numbers not adding up, You do understand that children don't work right? Remove children (the largest generation ever is currently in high school), then the roughly 40% or so of adults that are unemployed, retired or otherwise out of the workforce and it makes more sense. If you aren't convinced take a look at salaries in European nations, if you happen to find some reasonably high ones on average take a look at the population numbers of those nations.
I also wonder how a world with 7,600 million people can have a country of 323 million people that's all in the top 1% of people worldwide.
https://pseudoerasmus.com/2014/09/29/world-income-distributi...
The US underclass also suffer the social and psychological effects of being the underclass, i.e. weaker social support networks and exclusion from the millieu of political priorities.
You could certainly say that it's "not conclusive proof" of anything. However, this isn't a crowdsourced thesis paper. It's a web forum discussion thread, about a topic with only a thin tangential connection to the forum's main subject matter (i.e. technology and tech entrepreneurship).
It's amazing.
Which is only annoying because similar stores in Japan (which for me are a highlight of any trip to Japan) only charge ¥100.
I don't know if it's because of proximity to China or because Daiso knows they're offering better stuff than their literally $1 competitors here in the U.S.
"You get rich by saving what you have" is a nice feel-good story, but you get a lot richer by getting magnitudes more in income.
You can be frugal enough to live a comfortable middle class lifestyle -- but the people who are rich just make a ton more than you. That's it, that's the secret!
While I do not dispute the fact that many folks, especially in rural areas are very tight on money, the argument that Dollar Tree cannot be successful without rampant poverty seems unproven.
Just a single data point.
It means upper class
https://dqydj.com/household-income-percentile-calculator-201...
Right, but they're talking about their business plan. They are growing and expanding into rural, economically depressed areas.
You can be rich and still enjoy Dollar General, but if they are expanding massively into areas that mostly just contain the new "underclass," then their claim that "what the dollar stores are betting on in a large way is that we are going to have a permanent underclass in America" can still be accurate.
Also, time. I would rather pay more at Target than wal mart because in my experience it takes longer to check out at Walmart, and god forbid the person paying has a problem with their debit card or coupons or whatever.
And I pay more to shop at Amazon.com so that I don't have to go to Target.
High-end grocery stores do not tend to sell these brands -- You'll find 0 P&G products at a Whole Foods or Fresh Market. So in that sense, they are selling the same exact products.
It's not just those with few options. It's a general shift towards extremely cheap goods in general, which seems to often be true regardless of the amount of options in the area or the demographics of the folks that live there.
>“It reminds me of a craps table,” Brown, the commercial real estate analyst, says. “Essentially what the dollar stores are betting on in a large way is that we are going to have a permanent underclass in America. It’s based on the concept that the jobs went away, and the jobs are never coming back, and that things aren’t going to get better in any of these places.”
To it sounds like he doesn't understand that:
1) Being able to exist in places other stores cannot lets DG capture a ton of sales that would otherwise be rolled into a planned trip somewhere else.
If you need more toothpaste and your options are Walmart that's 1hr away or DG that's 30min away where are you going?
If DG or some other store can pay the bills the month that nobody happens to run out of toothpaste ahead of schedule they are around to turn a profit on a good month.
2)Rural areas are sparsely populated by definition. They do not have enough customers to support many stores that sell the same thing.
In suburban and urban areas some stores turn a profit with volume by attracting poor people with razor margins and other stores run thicker margins (or have higher costs) which make the poor people shop elsewhere but they make it back because the people who don't want to shop among poor people shop there instead. There just aren't enough customers to sustain this in a lot of rural areas.
3) You don't have to be poor to want to buy things at low prices.
A ridiculous number of "analysts" either ignore, or don't realize this. I have a 6-figure income, yet my wife will buy the cheapest crap she can find that will do what we need. Boots? Buy expensive ones that will last and not leak. Hallowe'en decorations? Head for the dollar store.
These little towns all had something in common. They had no noticeable industry, very limited business opportunities, and dilapidated and or dying community.
My and assessment, just driving through, is that these towns were all dead ends. I really hate saying that about people because it shouldn't be true. But for all intents and purposes they looked like they were in the last stage of existence.
What I see time and again our little towns that are too small to support even a Walmart or a grocery have one or two Dollar Generals. I'm not an economist and not sure what to make of that other than that a Dollar General seem to be pretty cheap to set up pretty cheap to stock and I guess and implicit acknowledgement that these markets are failures for anything other than dinky stores.
(edit: android voice to text mistakes)
OTOH in Indianapolis we also have dollar stores but not everyone uses them.
2. Globalization - Look around - there are almost always old warehouses either for food, lumber, or a small manufacturing plant that are run down - usually a few blocks away from downtown. These places one by one couldn't compete manufacturing cheaper goods from china or elsewhere
3. Walmartization - big box stores come in from out of town, suck up all the economic activity, pay people nothing, and ship all of the profits to HQ. Then the walmart closes, and there is nothing left.
There has never truly been anything in most of these towns. A good number had rail, canal, or other trasnportation connections, which made them viable (yet still small) at one time. Now most are really dependent on the next biggest "city" outside of the farming communities that bring them together. I Think the reason they get worse is because the hub cities - places like Kokomo, Marion, Muncie, and to a lesser degree Lafayette - have suffered. Manufacturing jobs that held these together no longer do that. Even outside of the "good-paying" factory jobs, it used to be OK to drive to the nearest city for a basic job. That's no longer the case (even though fuel prices have improved). And you wind up feeling like you are stuck.
Cars reshaped the landscape as stores / restaurants / movie theaters etc could draw from a large enough population to support themselves. However, farm automation drastically reduced the number of jobs causing young people to move out. Eventually you can't really support much, but the travel distance allows for some shops in these nano towns.
Remember, 80 acres used to be a viable small farm. Now 800 acres are generally just a hobby unless your raising livestock and buying a lot of feed.
https://en.wikipedia.org/wiki/Rust_Belt
“Before World War II, the cities in the Rust Belt region were among the largest in the United States. However, by the twentieth century's end their population had fallen the most in the country.”
Knowing nothing else about the particulars of why this was the case, it’s easy to see that this change would have drastic consequences for these areas.
> Like many rural towns, Decatur once fed itself and shared its bounty with the rest of America. At the turn of the 20th century, it had a tomato cannery and exported peaches, apples, strawberries, and beans by the boxcar from a downtown train depot. A population of 245 in 1915 supported two grocery stores and four general stores. But in the 1930s, blight outbreaks and insect invasions largely wiped out local orchards. The depot is now a museum where antique bushel baskets and poplar harvest crates hang from the ceiling.
To New York and London of the 1800s, the Midwest (especially) looked a lot like China did to us 20 years ago -- a massive pool of resources that could be exploited using the new technology.
Anyways, this town was founded as a railroad hub in the 1880's. Both a freight hub taking farmers' harvests and delivering goods to the farmers, and a passenger hub transporting people from the surrounding counties into the nearest big cities. The town also provided necessary services at a time when traveling more than 15-20 miles was a hardship. There was a grocery store, general store, cinema, funeral home, pharmacy, bars, couple of hotels, hardware store, and so on. Was a central gathering place for the farmers, and the people who provided services for the farmers.
Many of those businesses are long gone now. The town is still vital for farming because of its mill & grain elevator, and the hardware store still does great business. But the rest is gone. Even the railroad moved away. There are no tracks left in town and the main route is 20-30 miles away. The town survives because of inertia. And because some people are willing to commute an hour to their work in exchange for having a house in the country, and a school with small class sizes for their kids.
My parents grew up on either side of a small village that now has a dollar store as one of 4 or 5 shops. It started when the railroad came in to log and became a "potato town" where farmers brought their potatoes to the railroad.
There's a museum in the old potato warehouses.
I think dystopic cyberpunk universes are unsustainable - I don't get how you can cram hundreds of millions of under-classed people into what are essentially poverty ghettos without a total outright revolution, or just an apocalypse event that resets the technological scale or eradicates the human race. My perspective is that improvements in automation will lead to inevitably a realization that "working for food" is a dated concept that will go away. Hopeful, sure, but it's that or death in my opinion.
To see a business betting on the other end-game... that's harrowing.
[1] http://www.proceso.com.mx/336733/television-para-jodidos
a number of these universes seem inspired by a real life city... Hong Kong.
China seems to be giving it a pretty good go
Distract them Facebook and reality TV.
there is always an allure of only having to drive a short distance to obtain regularly needed goods. it gives a feeling to many that they aren't in the backwoods. for some it is all the community they will ever have outside of church and school. yet what the larger stores forgot is the good prices aren't always key, being quick to get to is. Dollar Tree/Dollar store remind me in some ways of some European grocery chains that have and are coming to America, shying away from large "centrally" located stores with tens of thousands of items instead for a tightly controlled and easily managed inventory in smaller lower cost areas.