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The economics of dollar stores

thehustle.co

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Re: The economics of dollar stores

#41

Post by celticninja »

alkonaut wrote: post #34
mnahkies wrote: post #30

Earlier quoted context omitted.

I think this point is underappreciated. Sometimes it definitely makes sense to pay more per unit/kg for some item for a smaller quantity if otherwise you'd be throwing out an excess

At some point I bought a sampler set of miniature colognes from one of the big makers (CK I think). Probably 5 x 5ml or something. Dirt cheap, and perfect for traveling. Turns out 5ml of cologne is enough for years and years if you use it rarely and sparingly (as you should). The huge 50 or 75ml perfume bottles must be one of the products most often thrown out without finishing. I bet CK thought these sampler sets wo…

No sure they are thrown out due to the expense, I know I would never throw one out. But I do end up with 3 different ones on rotation because I don't want the same smell all the time. Smaller ones would certainly be better for variety.

Re: The economics of dollar stores

#42

Post by sfifs »

justinjlynn wrote: post #36
kcorbitt wrote: post #17

Earlier quoted context omitted.

I realize the article mentions that sometimes happens, with their example being a 0.8oz deodorant. But as a frequent shopper it isn't my general experience. I often compare prices and on a unit cost basis (so controlling for the sometimes smaller dollar store quantities) you can almost always buy the same brand from a dollar store for a steep discount compared to a traditional supermarket or Target. In general I feel…

> buy the same brand That doesn't mean they're the same product or quality, however.

This isn't correct. Big brands virtually never skimp on product quality for smaller stores because it harms the long term equity and value. They customize quantity.

Re: The economics of dollar stores

#43

Post by PaulHoule »

41209 wrote: post #33
gambiting wrote: post #22

Earlier quoted context omitted.

>>That's sometimes merited (payday loans!) That's also a very interesting discussion to have because from what I understand, payday loans businesses exist because the alternative is worse - people who are desperate will always borrow money from someone, so it's better that they borrow from a well regulated business rather than from the "pay or we'll break your legs" kind. And then the 1000% APR is argued that it's th…

The worse alternative is sleeping on the streets when you can't pay your rent. While I do think payday loans are evil, I recognize why they exist. I would prefer a much more robust housing support system for lower income people. Almost all of society's problems could be fixed with more affordable housing. For example let's say you have abusive parents, if affordable housing exist the moment you turn 18 you can up and…

Depends. I got a car loan for a modest car with 0.7% APR, I don’t see a problem with that.

My mother-in-law leases a new Toyota Corolla every few years; she gets trouble-free motoring at a reasonable rate.

Myself I have no idea how many miles I am going to drive next year (do I work from home? take the bus? do I drive to Montreal or North Carolina a lot?) so I buy a similar car and drive it into the ground.

Many of those luxury cars are leased, not loaned; the headline number ($/month) looks low compared to a loan on a modest car. You will probably need a lot of warrantee repair (a Toyota and a Cadillac are quality cars in their own estimations, but not in each other’s; if you need your car to start in the morning so you can get to work pick the Toyota.)

Re: The economics of dollar stores

#44

Post by sfifs »

justinjlynn wrote: post #4

Ah, I see, so they make quite a bit of their profit by selling smaller quantities of lower quality goods at higher per unit prices through framing the value proposition carefully and managing expectations to their benefit. Makes sense, given the markets they target, that they're exploiting the effects of the 'Boots' theory of socioeconomic unfairness and quite successfully too.

There's a lot of equivalent store types in Asia. The Kirana stores in India, the Sari-Sari stores in Philippines, the neighborhood groceries in much of South East Asia etc. A very similar dynamic applies - the shoppers buy several times a week, maybe even every day because they're daily or weekly wage earners.

Re: The economics of dollar stores

#45

Post by 41209 »

PaulHoule wrote: post #43
41209 wrote: post #33

Earlier quoted context omitted.

The worse alternative is sleeping on the streets when you can't pay your rent. While I do think payday loans are evil, I recognize why they exist. I would prefer a much more robust housing support system for lower income people. Almost all of society's problems could be fixed with more affordable housing. For example let's say you have abusive parents, if affordable housing exist the moment you turn 18 you can up and…

Depends. I got a car loan for a modest car with 0.7% APR, I don’t see a problem with that. My mother-in-law leases a new Toyota Corolla every few years; she gets trouble-free motoring at a reasonable rate. Myself I have no idea how many miles I am going to drive next year (do I work from home? take the bus? do I drive to Montreal or North Carolina a lot?) so I buy a similar car and drive it into the ground. Many of t…

A Corolla is only $20,000, so that fits my point. But I have seen tons of people buying cars they can't afford, in order to impress people they don't like. The easiest way to waste tons of money is by buying an overpriced car

Re: The economics of dollar stores

#46

Post by d0100 »

gambiting wrote: post #22
kcorbitt wrote: post #17

Earlier quoted context omitted.

I realize the article mentions that sometimes happens, with their example being a 0.8oz deodorant. But as a frequent shopper it isn't my general experience. I often compare prices and on a unit cost basis (so controlling for the sometimes smaller dollar store quantities) you can almost always buy the same brand from a dollar store for a steep discount compared to a traditional supermarket or Target. In general I feel…

>>That's sometimes merited (payday loans!) That's also a very interesting discussion to have because from what I understand, payday loans businesses exist because the alternative is worse - people who are desperate will always borrow money from someone, so it's better that they borrow from a well regulated business rather than from the "pay or we'll break your legs" kind. And then the 1000% APR is argued that it's th…

Don't people in the US use credit cards? If you are going to payback the money on your next payday, why not just use the credit and pay it on your payday?

Do stores not allow split payments?

Re: The economics of dollar stores

#47

Post by bradleyjg »

justinjlynn wrote: post #4

Ah, I see, so they make quite a bit of their profit by selling smaller quantities of lower quality goods at higher per unit prices through framing the value proposition carefully and managing expectations to their benefit. Makes sense, given the markets they target, that they're exploiting the effects of the 'Boots' theory of socioeconomic unfairness and quite successfully too.

Bodegas in NYC make no pretense about being a good deal. It’s understood that you are paying for convenience.

Re: The economics of dollar stores

#49

Post by raverbashing »

sfifs wrote: post #42
justinjlynn wrote: post #36

Earlier quoted context omitted.

> buy the same brand That doesn't mean they're the same product or quality, however.

This isn't correct. Big brands virtually never skimp on product quality for smaller stores because it harms the long term equity and value. They customize quantity.

These products are so well optimized now they're mostly margin and packaging/shipping/handling cost.

I doubt your toothpaste tube cost more than $0.50 in actual materials to make. And on a store this can go for $3? $4? (from a quick look in Amzn - approx values the cheapest one is $8 for 6)

Re: The economics of dollar stores

#50

Post by bradleyjg »

d0100 wrote: post #46
gambiting wrote: post #22

Earlier quoted context omitted.

>>That's sometimes merited (payday loans!) That's also a very interesting discussion to have because from what I understand, payday loans businesses exist because the alternative is worse - people who are desperate will always borrow money from someone, so it's better that they borrow from a well regulated business rather than from the "pay or we'll break your legs" kind. And then the 1000% APR is argued that it's th…

Don't people in the US use credit cards? If you are going to payback the money on your next payday, why not just use the credit and pay it on your payday? Do stores not allow split payments?

People with bad/no credit can’t get credit cards (except secured cards, in which case you have to have the money upfront.) The Venn diagram between patrons of payday lenders and people with bad/no credit is a circle.
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