Dollar & Other General Merchandise Stores Industry Profile

The dollar and other general merchandise stores industry in the US includes about 33,000 retail outlets with combined annual revenue of about $50 billion. Major companies include Dollar General, Family Dollar, and Dollar Tree. The industry is concentrated, as these three companies account for nearly 60 percent of the retail establishments.

The industry includes single-price merchandisers as well as general merchandise stores. Department stores, discount department stores, and warehouse clubs and superstores are covered in separate industry profiles.

COMPETITIVE LANDSCAPE

Demand is driven by consumer spending, particularly among less affluent consumers, as most companies target the lower- to middle-income demographic. The profitability of individual companies depends on their ability to effectively locate stores, to maintain value in the eyes of the consumer, and to maximize their revenue per square foot. Large companies have advantages due to their ability to negotiate better lease arrangements for retail space, and lower product prices with manufacturers, vendors, and other suppliers. Small companies can compete effectively by filling a niche market or locating in a previously untapped market, as the barriers to entry are low; startup costs are estimated to be about $230,000 per retail outlet. The industry is labor-intensive: average annual revenue per worker is slightly less than $150,000.

The industry is highly competitive, as companies must compete within the industry, as well as with other retail categories such as discount department stores (Wal-Mart and Target), grocery ...