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Not sure I agree with it. 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

Not sure I agree with it. 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).

brudgers 9y ago
The expansion of Dollar General described in the article is in places unlikely to have bus service or a Kroger or CVS/Walgreens nearby. Those chains rely on high traffic counts found at busy intersections.
frogpelt 9y ago
You are correct. In the small town where I live, we have two options: a local overpriced grocery store and a Dollar General (also overpriced). 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 $4.00.
- bbarn 9y ago
  I think to a degree there's some equalization happening that small towns can't handle. I can't buy a gallon of milk for under 4$ anywhere in the urban area I live. Even if I drive up to walmart on the edge of the city. When I travel to smaller towns (which is a lot - I'm gone almost every weekend camping, exploring, biking, what have you) I'm often shocked at how places so far from transportation hubs can have goods so cheap. 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?
  - wcunning 9y ago
    A lot of that, in the specific case of milk, is that farther out from cities you can sell it fast enough to make sense. Milk is, legally speaking, "good" for about 2 weeks from the time it comes out of the cow. If you're in a city where everyone eats out at all meals, you might not sell enough out of one store to avoid spoilage. This means that costs to the store go up since they either have to pass on high trucking fees per gallon for buying few gallons, or they amortize those costs and end up charging more per gallon because they throw a lot of it out. Conversely, out in farming country where I grew up, the closest restaurant was 20 minutes drive away, so we didn't eat out much and bought a lot more groceries than the people I lived with in NYC. This means that the Meijer in town rarely has to throw out milk for being passed the sell by date, and is large enough, with people coming in from a 50 mile radius, to move the volume to get volume discounts. Doesn't hurt that a reasonable quantity of their milk is bottled in town and comes from cows about a mile from my house... "Far from transportation hubs" is relative to what you're transporting...
    - gph 9y ago
      I'm sorry but that sounds ridiculous, do you have actual experience with this sort of thing? I don't, but I'd be pretty blown away if a supply chain logistics expert came in here and said that groceries cost less in rural locations because people don't eat out as much. Why would they be unable to account for that? Do you really think urban consumers have random and unknowable patterns of grocery consumption that would lead to more spoilage? I'm gonna need to see some sources to back up this claim.
      - tormeh 9y ago
        Yeah, I'm going to go with low rent, low wages and low willingness to pay.
  - digikata 9y ago
    I don't think I'd really know until I broke down costs for overhead like rent, utilities, labor, etc. Most of those would be much higher in a urban setting than a rural. Then there's theft, spoilage, etc. Transportation is only one of those items. I think we would be shocked at how much the cost of an off the shelf physical item, isn't the item.
- lotsofpulp 9y ago
  If your two options are overpriced, what is stopping a newcomer from opening up shop?
  - neonnoodle 9y ago
    Economies of scale.
    - lotsofpulp 9y ago
      I don’t understand what economies of scale would have to do with being a middleman merchant. It doesn’t take a lot of capital to open a store, and there aren’t many legal barriers, and the workers don’t need to be trained. If there are only two stores, and no one is opening a third, then that must mean there’s not enough profit to make up for the risk of failing and continual operation of the business.
      - wahern 9y ago
        > It doesn’t take a lot of capital to open a store I think you underestimate the cost. AFAIU it takes significant capital to open a store, and there are far fewer people in rural areas both capable and willing. 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.)
- objectivetruth 9y ago
  US government stats report the national average cost for a gallon of milk is over $3 so any large retailer selling it for a buck a gallon is using it as a loss leader to draw folks into the store. And for more anecdata, our local DG runs $1 and $2 gallon milk sales frequently for the same reason.
  - PhasmaFelis 9y ago
    I've not been making much lately, and at my last place I actually drew up a spreadsheet of a couple dozen staple groceries that I buy regularly and noted their standard prices at the four stores nearest to me. It was quite useful in deciding when to shop nearby and when it was worth making a longer trip.
Digory 9y ago
Does DG carry fresh produce? You mention milk, and the article mentions groceries. 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.
- paulryanrogers 9y ago
  Soup?
- mgkimsal 9y ago
  not as a rule. the one by us had bananas and apples for a while, IIRC, but I think it was just an experiment the manager was trying.
- mohaine 9y ago
  No fresh produce. They are basically a cheaper/dirtier version of CSV/Walgreens. 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.
Sohcahtoa82 9y ago
> Dollar Tree [...] You have to hunt for the bargains that are actually worth it 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.
- tomschlick 9y ago
  > chinesium Thats the first time I have heard of that. Using it from now on, thanks haha.
  - VoiceOfWisdom 9y ago
    https://www.reddit.com/r/skookum https://www.reddit.com/r/skookum
  - rconti 9y ago
    See also: AvE on youtube.

brudgers 9y ago

The expansion of Dollar General described in the article is in places unlikely to have bus service or a Kroger or CVS/Walgreens nearby. Those chains rely on high traffic counts found at busy intersections.

frogpelt 9y ago

You are correct. In the small town where I live, we have two options: a local overpriced grocery store and a Dollar General (also overpriced). 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.

bbarn 9y ago
I think to a degree there's some equalization happening that small towns can't handle. I can't buy a gallon of milk for under 4$ anywhere in the urban area I live. Even if I drive up to walmart on the edge of the city. When I travel to smaller towns (which is a lot - I'm gone almost every weekend camping, exploring, biking, what have you) I'm often shocked at how places so far from transportation hubs can have goods so cheap. 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?
- wcunning 9y ago
  A lot of that, in the specific case of milk, is that farther out from cities you can sell it fast enough to make sense. Milk is, legally speaking, "good" for about 2 weeks from the time it comes out of the cow. If you're in a city where everyone eats out at all meals, you might not sell enough out of one store to avoid spoilage. This means that costs to the store go up since they either have to pass on high trucking fees per gallon for buying few gallons, or they amortize those costs and end up charging more per gallon because they throw a lot of it out. Conversely, out in farming country where I grew up, the closest restaurant was 20 minutes drive away, so we didn't eat out much and bought a lot more groceries than the people I lived with in NYC. This means that the Meijer in town rarely has to throw out milk for being passed the sell by date, and is large enough, with people coming in from a 50 mile radius, to move the volume to get volume discounts. Doesn't hurt that a reasonable quantity of their milk is bottled in town and comes from cows about a mile from my house... "Far from transportation hubs" is relative to what you're transporting...
  - gph 9y ago
    I'm sorry but that sounds ridiculous, do you have actual experience with this sort of thing? I don't, but I'd be pretty blown away if a supply chain logistics expert came in here and said that groceries cost less in rural locations because people don't eat out as much. Why would they be unable to account for that? Do you really think urban consumers have random and unknowable patterns of grocery consumption that would lead to more spoilage? I'm gonna need to see some sources to back up this claim.
    - tormeh 9y ago
      Yeah, I'm going to go with low rent, low wages and low willingness to pay.
- digikata 9y ago
  I don't think I'd really know until I broke down costs for overhead like rent, utilities, labor, etc. Most of those would be much higher in a urban setting than a rural. Then there's theft, spoilage, etc. Transportation is only one of those items. I think we would be shocked at how much the cost of an off the shelf physical item, isn't the item.
lotsofpulp 9y ago
If your two options are overpriced, what is stopping a newcomer from opening up shop?
- neonnoodle 9y ago
  Economies of scale.
  - lotsofpulp 9y ago
    I don’t understand what economies of scale would have to do with being a middleman merchant. It doesn’t take a lot of capital to open a store, and there aren’t many legal barriers, and the workers don’t need to be trained. If there are only two stores, and no one is opening a third, then that must mean there’s not enough profit to make up for the risk of failing and continual operation of the business.
    - wahern 9y ago
      > It doesn’t take a lot of capital to open a store I think you underestimate the cost. AFAIU it takes significant capital to open a store, and there are far fewer people in rural areas both capable and willing. 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.)
objectivetruth 9y ago
US government stats report the national average cost for a gallon of milk is over $3 so any large retailer selling it for a buck a gallon is using it as a loss leader to draw folks into the store. And for more anecdata, our local DG runs $1 and $2 gallon milk sales frequently for the same reason.
- PhasmaFelis 9y ago
  I've not been making much lately, and at my last place I actually drew up a spreadsheet of a couple dozen staple groceries that I buy regularly and noted their standard prices at the four stores nearest to me. It was quite useful in deciding when to shop nearby and when it was worth making a longer trip.

Digory 9y ago

Does DG carry fresh produce? You mention milk, and the article mentions groceries. 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.

paulryanrogers 9y ago
Soup?
mgkimsal 9y ago
not as a rule. the one by us had bananas and apples for a while, IIRC, but I think it was just an experiment the manager was trying.
mohaine 9y ago
No fresh produce. They are basically a cheaper/dirtier version of CSV/Walgreens. 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.

Sohcahtoa82 9y ago

> Dollar Tree [...] You have to hunt for the bargains that are actually worth it 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.

tomschlick 9y ago
> chinesium Thats the first time I have heard of that. Using it from now on, thanks haha.
- VoiceOfWisdom 9y ago
  https://www.reddit.com/r/skookum https://www.reddit.com/r/skookum
- rconti 9y ago
  See also: AvE on youtube.