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Dollar General is a publicly traded company that started in 1939 by J.L. Turner in Kentucky. It offers a broad selection of merchandise, including consumables, seasonal, home products and apparel. Growing from a single wholesale store to the country’s largest small-box retailer; still as passionate about its commitment to serving customers, employees and community today. The decision to switch to retailing from its initial start-up plans resulted in annual sales above $2 million by the early 1950s, and the rest is history. In October 1939, J.L. and Cal opened J.L. Turner and Son Wholesale with an initial investment of $5,000 each. Wholesaling quickly gave way to retailing. The first Dollar General store opened in Springfield, Ky. on June 1, 1955, and the concept was simple – no item in the store would cost more than one dollar (1.00). The idea was a huge success and the other stores quickly converted to the same concept. By 1957, annual sales of Dollar General’s 29 stores were $5 million.
In 1968, the company went public as Dollar General Corporation. Today, the company is a leading discount retailer with more than 15,000 stores in 44 states. The company remains true to the humble ethic of hard work and friendly customer service embodied by its founding family members. he yellow Dollar General store sign is a popular symbol of value. Our convenient, everyday low prices model has survived and thrived through the decades. The company remains true to the humble ethic of hard work and friendly customer service embodied by the founding family. About a quarter of Dollar General’s merchandise still sells for a dollar or less. The simplicity that defined our past is the engine that drives our success today.
This paper is a Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis on the Dollar General Corporation. The process of creating this SWOT Analysis is valuable because it involves discussion among managers or key people in the business. Based on this SWOT analysis, here are a few potential strategies for growth to translate the SWOT into achievable goals. The below analysis on each section is a SWOT conducted by Fern Fort University, Ferndale, Michigan.
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STRENGTHS
- Present in over a 10,000 locations
- Over 90,000 employees
- The exclusive distributor for Rexall products
- DG brand is inexpensive
- Popular brand visibility
WEAKNESSES
- High Warehouse inventory
- Small store sizes
OPPORTUNITIES
- Purchasing of small retail chains
- More visibility and customer focused services
- Tapping into international market
THREATS
- Increasing operating costs.
- Local competition
Strengths
Dollar General is a staple in the small community. You can find one in almost every small town. Some people even call them the country Wal-Mart. This can be attributed to several things. The below items were listed in a SWOT analysis conducted by Fern Fort University. (www.fernfortuniversity.com/term-papers/swot/1433/139-dollar-general.phpStrong distribution network – Over the years Dollar General has built a reliable distribution network that can reach majority of its potential market.
Strong Brand Portfolio – Over the years Dollar General has invested in building a strong brand portfolio. The SWOT analysis of Dollar General just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Successful track record of developing new products – product innovation.
Good Returns on Capital Expenditure – Dollar General is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
Highly successful at Go To Market strategies for its products.
Successful track record of integrating complimentary firms through mergers & acquisition. It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
Highly skilled workforce through successful training and learning programs. Dollar General is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.
Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks. Strong distribution network – Over the years Dollar General has built a reliable distribution network that can reach majority of its potential market.
Strong Brand Portfolio – Over the years Dollar General has invested in building a strong brand portfolio. The SWOT analysis of Dollar General just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Successful track record of developing new products – product innovation.
Good Returns on Capital Expenditure – Dollar General is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
Highly successful at Go To Market strategies for its products.
Successful track record of integrating complimentary firms through mergers & acquisition. It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
Highly skilled workforce through successful training and learning programs. Dollar General is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.
Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
Weaknesses
Weaknesses are things that Dollar General can improve upon. It can take these findings build upon these weaknesses, expound upon them and use it to its advantage. Here are some weaknesses:
Investment in Research and Development is below the fastest growing players in the industry. Even though Dollar General is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation. It has come across as a mature firm looking forward to bring out products based on tested features in the market.
Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
Not very good at product demand forecasting leading to higher rate of missed opportunities compare to its competitors. One of the reasons why the days inventory is high compare to its competitors is that Dollar General is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
Not highly successful at integrating firms with different work culture. As mentioned earlier even though Dollar General is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
The marketing of the products left a lot to be desired. Even though the product is a success in terms of sale but its positioning and unique selling proposition is not clearly defined which can lead to the attacks in this segment from the competitors.
The profitability ratio and Net Contribution % of Dollar General are below the industry average.
Limited success outside core business – Even though Dollar General is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture. (Fern Fort University)
Opportunities
The market development will lead to dilution of competitor’s advantage and enable Dollar General to increase its competitiveness compare to the other competitors.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Dollar General to capture new customers and increase its market share.
Government green drive also opens an opportunity for procurement of Dollar General products by the state as well as federal government contractors.
New customers from online channel – Over the past few years the company has invested vast sum of money into the online platform. This investment has opened new sales channel for Dollar General. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
Organization’s core competencies can be a success in similar other products field. A comparative example could be – GE healthcare research helped it in developing better Oil drilling machines.
The new technology provides an opportunity to Dollar General to practices differentiated pricing strategy in the new market. It will enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented propositions.
Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for Dollar General in other product categories.
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Dollar General an opportunity to enter a new emerging market.
Threats
Dollar General Facing – External Strategic Factors
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
No regular supply of innovative products – Over the years the company has developed numerous products but those are often response to the development by other players. Secondly the supply of new products is not regular thus leading to high and low swings in the sales number over period of time.
The demand of the highly profitable products is seasonal in nature and any unlikely event during the peak season may impact the profitability of the company in short to medium term.
Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Dollar General.
New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
Rising raw material can pose a threat to the Dollar General profitability.
Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors. (Fern Fort University)
In conclusion, Dollar General was the first ever discount store. It has sustained the test of time through depression and recessions by changing with the times but still remaining loyal to its primary beliefs of providing low costs to its customers. By offering low prices its customers can still buy name brand products without breaking the bank.
References
- www.fernfortuniversity.com/term-papers/swot/1433/139-dollar-general.php
