The economics of dollar stores • Hacker News Board

Re: The economics of dollar stores

#71

Post by mkr-hn » Sun, Jun 27, 2021, 1:31 PM UTC

mnahkies wrote: post #65

PaulHoule wrote: post #43

Earlier quoted context omitted.

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…

I've never paid more than about 3.5k USD for a car. Not sure what the second hand market is like in America but in NZ and UK you can get great cars for a fraction of the cost of buying new. In terms of maintenance, I've had some that were troublesome, and some that needed nothing, it's a bit of a lottery in that regard. Most common problems are solvable with a few hours on your back in the garage though. Possibly mos…

The Cash for Clunkers program destroyed the used car market in the US. It's slowly recovering as cars from the 2000s and 2010s enter it.

Re: The economics of dollar stores

#72

Post by eloisant » Sun, Jun 27, 2021, 1:34 PM UTC

Clewza313 wrote: post #32

100 yen (approx $1) have long been huge in Japan too, and their business model is even simpler: most of what they sell is plastic and made to order in China in huge volumes. They have grocery selections too, but nothing that would require refrigeration or otherwise spoil quickly. And while hardly luxury, they're also not down-market in the way that Dollar X's in the US are, many are located in central business distri…

I'm not sure about US dollar stores but there are really good deals at Japan's 100 yen shops. For example simple plastic boxes that cost 10 euros in France are at 100 yen in those shops.

So in Japan it's not just for poor people, there are items where it doesn't make sense to buy them anywhere else than a 100 yen shop.

Re: The economics of dollar stores

#73

Post by dazc » Sun, Jun 27, 2021, 1:46 PM UTC

bradleyjg wrote: post #50

d0100 wrote: post #46

Earlier quoted context omitted.

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.

Also likely that such people who do have credit cards are already maxed-out to their limit and paying the monthly minimum?

Re: The economics of dollar stores

#74

Post by lotsofpulp » Sun, Jun 27, 2021, 1:57 PM UTC

arcturus17 wrote: post #59

raverbashing wrote: post #49

Earlier quoted context omitted.

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)

Toothpaste costs $6-$8 in Amazon US? Holy cow.

No, it is ~$3 for a standard ~5oz size.

https://www.amazon.com/Crest-Complete-Whitening-Toothpaste-T...

Amazon is more expensive than Costco/Walmart/Target, but especially so for dense, heavy items like liquids (or toothpaste).

Re: The economics of dollar stores

#75

Post by lotsofpulp » Sun, Jun 27, 2021, 2:02 PM UTC

celticninja wrote: post #39

justinjlynn wrote: post #36

Earlier quoted context omitted.

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

I don't think a brand will change their recipe or reduce quality of components, when simply resizing is easier. If they wanted to do that then they would be better off creating a different lower cost brand, rather than a new manufacturing process for $ store items.

Brands will offer a cheaper quality product with a slightly different model number in electronics though.

Re: The economics of dollar stores

#76

Post by death_syn » Sun, Jun 27, 2021, 2:25 PM UTC

When the pandemic hit, I switched my shopping almost exclusively to Dollar General, because despite the slightly higher prices compared to Walmart (sometimes) and Aldi (almost always), the number of customers in the store was always pretty light at any one time. I did still have to go to one of those places for things I couldn't get there (premium cheeses, premium meats). But, that became a once a month outing at most versus my weekly shopping trip, which turned from 20-30 minutes to 10 minutes in total, with less exposure to other humans. I honestly believe the Dollar General may have saved my health as far as COVID exposure risk goes.

Re: The economics of dollar stores

#77

Post by PopePompus » Sun, Jun 27, 2021, 2:31 PM UTC

atlanta90210 wrote: post #53

Family Dollar operates a store near me in Atlanta. Their parking lot is so filthy sometimes the neighbors organize to go clean it up. It appears to me Family Dollar hates their customers given the food choices, the attitude of the employees and how they maintain their property. I avoid them all.

I've been struck by how ugly some stores catering to the poor are. Not ugly because they are cheaply decorated, but intentionally ugly, using things like black on yellow coloring for signage, etc. I guess it's eye-catching, but not in a good way.

Re: The economics of dollar stores

#78

Post by brudgers » Sun, Jun 27, 2021, 2:31 PM UTC

To know me is to know I am cheap. All dollar stores are not equal.

Everything in DollarTree is $1.00. That's not the case with the other two big chains. Not by a long shot.

A few weeks ago I was thinking about DollarTree economics as I drove down the Susquehanna Valley.

Seems like it collects pretty valuable data about consumer preference and demand in the absence of differential pricing. Campbells condensed Chicken Noodle or Tomato? One eight inch chef's knife or one six inch knife or two four inch knifes?

When I buy a knife and a can of soup and three picture frames, that combination is informative for merchandising a Kroger or a Walmart. There's a long play there.

Particularly because I might use a credit card.

Dollar General and Family Dollar are traditional retailers with no aversion to gouging the locals. They are slightly larger gas station convenience stores without the environmental problems of gas tanks and the real-estate expenses of space for pumps and busy corner locations.

Re: The economics of dollar stores

#79

Post by jhbadger » Sun, Jun 27, 2021, 2:32 PM UTC

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.

At least clothing manufacturers do skimp on quality for downmarket sales. It used to be that clothing at "outlet centers" were literal overstock items, but as they've become more popular, clothing makers now have cheaper, lower quality clothing made especially for sale in outlets.

Re: The economics of dollar stores

#80

Post by Scoundreller » Sun, Jun 27, 2021, 2:33 PM UTC

sfifs wrote: post #51

raverbashing wrote: post #49

Earlier quoted context omitted.

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)

CPG industry margins are quite public as almost big brands are owned by listed companies. They're not high. The highest margin categories for big retailers i believe tend to be clothing.

They're not wrong about the big difference between production cost and selling price. CPGs are basically in a war with eachother over marketing and need to spend the maximum amount possible to get you to but their $3 toothpaste over another CPG's $3 one and over a lower-priced generic. If they could cut their marketing budget in half, they would, but that would only work short-term.