Q1. Compare the business model of Extreme Value Retailers in general and Dollar General in particular with mass discount retailers with Wal-mart.
ANS. DG can be named Extreme Value Retailer in the U.S dollar-store showcase. There are however, a few Price Point retailers, Close Out retailers and Limited Assortment grocery retailers that can be classified in to the dollar store market. But these don't work on the scale restricted to Everyday Low Prices (ELDP) retailers. Dollar General and Family Dollar are the greatest rivals in the outrageous esteem dollar market.There market.There are be that as it may, 23,000 such stores in extraordinary value retailers who can be called coordinate contenders contenders of Dollar General. Around 15 organizations in this fragment have acquired 61% of the market. This demonstrates the market is highly fragmented. Mass retailers, for example, Wal-Mart, Target, Costco don't come under an indistinguishable class from DG yet they do posture conceivable business business dangers. Be that as it may, they are driven by various mission and diverse business concept. DG is a littler store as far as size, stock selection, selling space, bargaining force, and client base. Subsequently Subsequently Dg has found a few of its store beside Wal-Mart to serve the essential needs of shoppers by offering included convenience and low price. Lastly, DG is a national player dissimilar to Wal-Mart and Aldi. DG is additionally additionally provincially fragmented fragmented and does not work in each of the 50 states like Wal-Mart. If DG intends to extend its operation internationally internationally it will be set at a similar rivalry stature Wal-Mart and Aldi are. Wal-Mart is a mass retailer with a higher turnover working on a significantly bigger scale and locale than Dollar General. Wal-Mart stores are situated in communities that have a populace of at least 50,000, work on a selling space of 100,000 square feet and 75,000 Store-Keeping Units. This contrasted with 6900 square feet and 4900 Store Keeping Units working structure of stores possessed by Dollar General. Wal-Mart's objective clients are Dollar General's main goal is to furnish clients with an engaged collection of decently estimated, consumable merchandise merchandise in a helpful, little store setup. To serve their mission Dollar General concentrated on even-dollar value purposes of $0.50 and $1.50, and it center competency competency were convenience convenience and cost. Dollar General additionally gives faster client benefit and small waiting times for its clients. While Wal-Mart offers a high
choice base to its clients, vast assortment of brands, every single accessible size, all at low costs. Wal-Mart also commands a high bargaining power from its providers because of the amounts its can stock and is setup in every one of the 50 states of America. Q2. Analyze the growth of Dollar general in the recent past?
ANS. Dollar General serves a niche market and offers low costs by managing and executing low cost strategy. Stocking least stock, contracting sufficient number of staff, keeping land costs low, and accomplishing natural growth through development, and keeping the overheads low has given Dollar General an engaged cost initiative technique in its industry in light of the fact that of. Dollar General has kept pace with mechanical changes by installing auto-renew inventory framework intelligible with its Point-Of-Sale framework. They have now begun accepting Credit and Debit cards and are one of only a handful couple of retailers to have obtained Electronic Benefit Transfer (EBT) capability from U.S government. Card per users have additionally been acquainted with making shopping less demanding and quicker . Dollar General serves a niche market and offers low costs by managing and executing a low-cost strategy. Stocking minimum stock, contracting adequate number of staff, keeping land costs low, and achieving natural growth through advancement, and keeping the overheads low has given Dollar General a connected with cost activity system in its industry in light of the way that of Dollar General has kept pace with mechanical changes by introducing auto-reestablish stock system comprehensible with its Point-Of-Sale structure . They have now started accepting Credit and Debit cards and are one of just a modest bunch couple of retailers to have acquired Electronic Benefit Transfer (EBT) capacity from U.S government. Card per clients have furthermore been familiar with making shopping less demanding. Dollar General has kept up its leadership position inside its industry by embracing an exceptional cost-effective corporate approach in each conceivable operation and administration. This strategy is clear from Dollar General's store-size, store location in sub-urban zones with populace of 20,000 or less,low consumption on land by renting space for short term, low inventories, under 1% of offers spent on promoting, and minimum number of staff utilized. This technique has helped
Dollar General since decades however now needs to under-go several administration, operational, and auxiliary changes by focusing on long haul as opposed to here and now picks up to please Wall Street financial specialists. The outrageous esteem retail advertise has a high Threat of Entry of new contenders and low boundaries to section. The cost of setting up a store are not high and a few obstructions like patents,research and advancement costs, promoting, publicizing don't represent a risk to new contestants in the business. The business is flooded with discounters as there are not more than 23,000 stores working across the nation. Also, the industry is highly fragmented and regionalized. Dollar General too operates mainly in southeaster, southwestern, and midwestern locale. Q3. Do you think mass discounters like Wal-mart will be able to replicate Dollar General’s success?
ANS. Wal-Mart being profoundly fruitful Extreme-Value Mass Retailer is equipped for defining a technique to battle Dollar General's ordinary low evaluating. There are factors that have kept and may shield Wal-Mart from giving Dollar General a tough rivalry on various deal focuses. The components, In my view, are collected of auxiliary develop of the retail business. The extreme value retail market has a high Threat of Entry of new contenders and low obstructions to section. The cost of setting up a store are not high and a few hindrances like patents,research and improvement costs, showcasing, promoting don't represent a danger to new participants in the business. The business is flooded with discounters as there are not more than 23,000 stores working across the nation. Also, the industry is highly fragmented and regionalized. Dollar General too operates mainly is southeaster, southwestern, and midwestern district. Wal-Mart can react to Dollar General's low pricing, according to me, in two conceivable ways: 1. By setting up stores that work and convey indentical value like Dollar General in a situation that takes after Dollar General's comfort and cost. This technique can allow Wal-Mart to enter showcase taking into account low income consumers while keeping up their present stature and strategy of existing store's choice, cost, and value. To add to that, this system will likewise permit Wal-Mart keep its
present methodology in place of serving mass customers and giving all that they require under one rooftop. Setting up new stores that are littler in measure yet offer bigger assortment of items to browse can enhance their productivity. 2. Wal-Mart can likewise give the merchandise at a rebate to level with Dollar General if not beat them. Since have Wal-Mart has the advantage of being a superstore, they can offer lower cost to clients at value focuses comparative or lower than Dollar General. It likewise appears to be less demanding for Wal-Mart to offer higher rebates by exploiting its dealing power; consequently pushing rivalry away.
Q4. Among the given options, what do you suggest as the future expansion for Dollar General?
ANS. Dollar General is as of now looking at growth through development of stores or search inside its business to identify the deviations that have made a few stores unprofitable and get erect a working framework that can deal with the changing and expanded requirements of the clients and the business. The organization's execution has seen a descending incline in the recent years. Their Gross Margins have been high whereas their Selling and Administrations costs have additionally been high. Since 2000 organization has being seeing a gradual decline in deals and same store deals. Dollar General has additionally not possessed the capacity to meet its objective of opening 800 stores in 2007.Several such certainties prompt the conclusion that Dollar General, in dislike of high development, has not possessed the capacity to accomplish its targeted development because of its operational and management inefficiencies, deficient innovative progression, limited expansion in new classes, and restricted product mix advertised. Growth Options available to Dollar General
Each available option will be ranked as high, low, and moderate. High implies highly favorable to Dollar General, low will be least favorable, and moderate implies an option that may not have adverse effects on the outcomes.
Demographic Pursue Urban Consumer:
This option, in my view, is a low key option as Dollar General’s entire business concept revolves around offering basic consumer goods with convenient shopping at low price to low-income earners who reside in suburban areas. Pursuing urban consumers would require DG to re-establish its policies, operations, management, and understanding of consumer market. Pursue More Affluent Consumer:
This option is a low key option for Dollar General at this point since the Extreme value retail is fragmented and there is still unsaturated, hence there is possible room for expansion for DG within its category. DG should focus on its current niche but should give them more options with the same convenience and low price. Geographic Growth Expand into Western U.S :
This option would be highlyfavorable to Dollar General, since there may be possiblemarkets in the western U.S that would highly suit DG’s cultureand its operating structure. Also DG may be able to make loyalcustomers in the western part as well and making it a bigger player in the retail segment. International Expansion:
this a moderate option for DG to adopt at this juncture since the European market would bedominated by players like Aldi and unless DG can back themselves with the operational and managerial expertise tosurvive competition from local companies, it would be lethalto enter into international markets. DG, can however, eyecertain markets that are conducive to their kind of businessstructure and can sustain the needs of the market. In-fill existing U.S presence :
This would be a high-key optionfor DG since they U.S market can sustain upto 40,000 suchretail stores, DG would be better of expanding its presence inthe U.S market to achieve maximum growth before its reachesthe saturation point.
Industry roll-up:
This option is also a high-key option for DGsince the industry is fragmented and region based. One of the best options for growth would be to consolidate and buy outsome of the stores in the retail industry. This would give themthe ideal location and also enable them to serve the customers better.
