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Dollar General Case Study

2669 words - 11 pages

Table of ContentEXECUTIVE SUMMARY 21. Background 32. Dollar General diagnosis 4a. Financial analysis 4b. Strengths and weaknesses analysis 53. External Analysis 7a. Competitors 7b. Opportunities and threats analysis 84. Problem identification 10REFERENCES 11EXECUTIVE SUMMARYDollar General is a retailing company, especially extreme value oriented.Since its establishment in 1955, Dollar General has drastically grown. In 10 years, from 1955 to 1965, the Company grew to 255 stores with annual sales of $25.8 million. Today, Dollar General owns 6,300 stores in 27 states, with 2002 annual sales of $6.1 billion and more than 54,000 employees. This growth was extremely fast in the 1990's. The number ...view middle of the document...

He has to choose in which direction Dollar General will go. He has to go on the expansion of the Company but with the arrival of new and very powerful competitors such as Wall-Mart or Kmart.1. BackgroundDollar General is a discount retailer of general merchandise, with around 6,300 discount stores in over 27 states in 2003. The Company, which headquarters are based in Goodlettsville, Tennessee engages in the provision of general merchandise at low prices, serving customers in Midwestern and Southeastern US.The Company offers its customers an assortment of consumable basic merchandise, which includes: health and beauty aids, packaged food products, cleaning supplies, hardware, stationery, household items and basic apparels. The majority of its items are priced at $1. The Company employed around 54,000 employees. Their buying staffs negotiate low purchase prices from suppliers. It purchases its merchandise from various major suppliers. To maintain high in stock levels of core merchandise, the Company usually limits its stock-keeping units per store.TimelineIn 1939, with only a third grade education, J.L. Turner formed his own company in Scottsville, Kentucky, with his son, Cal.In 1955, Cal Turner and his son Cal Turner Jr. opened the first Dollar General store in Springfield, Kentucky.In 1965, they operated in 255 stores and generated $25.8 million of sales.In 1976, Dollar General exceeds annual sales of $100 million for the first time.At the beginning of the 1990s, the Company's annual sales kept increasing and began to expand store sizes from 5,000 square feet to 6,800 square feet.In 2000, Dollar General's corporate employees move to Goodlettsville, Tennessee. The move also saw the most aggressive store reset in the Company's history, in which, more than 5,000 stores were set.In 2001, the Company began offering perishable products. This program included a selection of dairy products, meats, frozen foods and ice cream, and was expanded from 411 stores at the end of 2001 to 1,367 stores at the end of 2002.In February 2003, 7 distribution centres which served around 6,192 stores in 27 states and generated in net sales $6.1 millions.2. Dollar General diagnosisa. Financial analysisNet SalesIncreases in net sales resulted primarily from 587 net new stores and a same-store sales increase of 4.0% in 2003 compared to 2002, and 573 net new stores and a same-store sales increase of 5.7% in 2002 compared to 2001. The Company's merchandising strategy in recent years has been to place a greater emphasis on faster-turning consumable products and to give less prominence to slower-turning home products and clothing. The Company believes that this strategy has enabled it to better serve its customers while improving its inventory turns. As a result of this strategy, over the past three years the highly consumable category has become a greater percentage of the Company's overall sales mix while the percentages of the home products, seasonal product and basic...

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