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The economics of dollar stores

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Re: The economics of dollar stores

#211

Post by wirthjason »

zdragnar wrote: post #115
wirthjason wrote: post #84

Earlier quoted context omitted.

They are popular because they are good. The products have good designs and reasonable quality, at or above the $1 level. The stores are bright, clean, and the staff friendly. My guess is that they have a much more integrated supply chain than the stores in the US and can better understand what their customers want/need. There is an air of quality around ¥100 shop shop and a stigma of $1 stores being junk. Any reasona…

I used to have the same opinion of dollar tree and co, until I met my wife, who shops there frequently. Like any other store, there are certain things that you should get elsewhere. However, I was genuinely impressed that the quality of many things was quite a bit higher than what the stereotype had led me to believe. Edit: perhaps it is worth pointing out that she also shops Wal-Mart and aldis, and buys only from ea…

What are the good things to buy there? I think someone else mentioned crayons in this thread.

Re: The economics of dollar stores

#212

Post by laurencerowe »

bradleyjg wrote: post #186
laurencerowe wrote: post #184

Earlier quoted context omitted.

That's definitely not true for all paperback books. I often buy remaindered paperbacks at Dog Eared and Alley Cat bookshops in San Francisco. You can tell they're remaindered because they're marked with felt tip. When I lived in the UK, Fopp was a great source for them (along with discount films and music.)

My knowledge of the subject goes back to a high school job in a bookstore. Things may well have changed since then. Back then we ripped the covers off mass market paperback and sent them back to the publisher for a credit. The books were supposed to be discarded but you did from time to time come across a paperback book with no cover at a thrift store or similar, so clearly that didn’t always happen.

The remaindered paperbacks I bought may have been higher quality trade paperback versions rather than the regular mass market ones which get pulped.

Re: The economics of dollar stores

#213

Post by gambiting »

Falling3 wrote: post #191
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…

> And then the 1000% APR is argued that it's the actual cost of risk with these loans since they default so often. Isn't that a bit of a self-fulfilling prophecy?

I imagine they aren't defaulting because of the interest though - more that the borrower didn't even have the ability to repay the original amount at all.

Re: The economics of dollar stores

#214

Post by kaptain »

Liron wrote: post #90
kaptain wrote: post #35

It’s expensive to be poor.

On the contrary, we should appreciate that every single item in the dollar store is a marvel of modern economies of scale that benefits all customers, poor ones most of all. Show a modern dollar store to a Soviet Russian in 1989 or anyone from 100 years ago and they’d go nuts.

That's not my point. Yes, someone poor benefits greatly from a dollar store, but they're paying a premium that someone that is more wealthy does not pay because the wealthy person can take advantage of economies of scale: a wealthy person can buy 100 rolls of toilet paper for $50 where a poor person can only buy one roll for $1.

This extends beyond just the dollar store. A wealthy person has access to a vehicle which allows them to go to Costco that is 10 km away. A wealthy person has storage in their home to house the discounted goods they buy. A wealthy person has access to financing and financial investments that a poor person does not; you cannot buy a portion of share of stock.

Re: The economics of dollar stores

#215

Post by zdragnar »

wirthjason wrote: post #211
zdragnar wrote: post #115

Earlier quoted context omitted.

I used to have the same opinion of dollar tree and co, until I met my wife, who shops there frequently. Like any other store, there are certain things that you should get elsewhere. However, I was genuinely impressed that the quality of many things was quite a bit higher than what the stereotype had led me to believe. Edit: perhaps it is worth pointing out that she also shops Wal-Mart and aldis, and buys only from ea…

What are the good things to buy there? I think someone else mentioned crayons in this thread.

It really depends on your needs and access to other stores.

There's a relatively limited selection of greeting cards compared to places like walmart or target, but you'll save 4-5 dollars each that way.

Dish detergent and other cleaning supplies can be hit or miss, same with staple spices like black pepper.

We have a lot of battery operated candles that we use semi-frequently, and after a failed experiment with rechargable batteries bought online, we went back to the dollar packs of AA and AAA. For smoke detectors and other 9v batteries, I tend to go elsewhere.

Pet supplies can be a really good deal- collars and toys. I don't know that I would trust their food or treats other than the milkbone biscuits that my wife's dog has been happily eating for 17 years.

Laundry softener sheets if you use them, holiday decor, some craft supplies, scissors or other items that you might use on occasion. If it is going to see heavy use, probably buy elsewhere. If not, and you just need something that gets the job done, dollar tree can be hard to beat.

That last point is why I tend to dislike applying the "boots" trope to these stores- not everything you buy will be worth investing top dollar in.

Some things I would definitely consider passing on- their olive oil "blend" bottles might seem like a good deal until you read the ingredients. It is 98% canola, 2% olive oil. It is probably the only item that actually is a real rip-off of the tings that I have looked closely at.

Re: The economics of dollar stores

#216

Post by pnutjam »

fennecfoxen wrote: post #207
pnutjam wrote: post #152

Earlier quoted context omitted.

Ever had a payday loan? I'm guessing no.

i'm unsure why this would make APR a better tool to understand two-week loans, or how it would make things less paternalistic

The process is pretty demeaning and profits are higher then you think. The lenders dilute the profits by opening stores all over the place. It's a competitive industry. APR is the accepted measure for loans, why should they break the standard and get special treatment?

Re: The economics of dollar stores

#217

Post by gruez »

kaptain wrote: post #214
Liron wrote: post #90

Earlier quoted context omitted.

On the contrary, we should appreciate that every single item in the dollar store is a marvel of modern economies of scale that benefits all customers, poor ones most of all. Show a modern dollar store to a Soviet Russian in 1989 or anyone from 100 years ago and they’d go nuts.

That's not my point. Yes, someone poor benefits greatly from a dollar store, but they're paying a premium that someone that is more wealthy does not pay because the wealthy person can take advantage of economies of scale: a wealthy person can buy 100 rolls of toilet paper for $50 where a poor person can only buy one roll for $1. This extends beyond just the dollar store. A wealthy person has access to a vehicle which…

>you cannot buy a portion of share of stock.

Robinhood (and other many other brokers) support fractional shares

Re: The economics of dollar stores

#218

Post by gruez »

timbit42 wrote: post #197
Liron wrote: post #90

Earlier quoted context omitted.

On the contrary, we should appreciate that every single item in the dollar store is a marvel of modern economies of scale that benefits all customers, poor ones most of all. Show a modern dollar store to a Soviet Russian in 1989 or anyone from 100 years ago and they’d go nuts.

Not with the inflation since 100 years ago.

Why 100 years? Soviets were around as recently as 30-ish years ago. Also inflation makes it even more impressive, if we look at the goods you can get relative to what you can buy with a median hourly wage.

Re: The economics of dollar stores

#219

Post by mianas »

rootusrootus wrote: post #188
hn_throwaway_99 wrote: post #101

So if I can summarize the article, the economics of dollar stores are "sell things for more than it cost to buy them". I mean, it seemed like the article wanted to have some nefarious take, but offering smaller quantities of items so people can afford them, even if the per-unit cost is higher, doesn't seem like some unexpected malicious intent. I mean, I certainly expect to pay more per gram if I'm buying a travel si…

I think it's useful information, even if it should be intuitive. I know a number of people who shop at the dollar store because they believe they're saving money. In particular I think it's nice to shed some light on the special arrangements the stores make with manufacturers to produce products that look like the equivalent of what you get in a normal store but only cost a dollar, while in fact containing so little…

The 'lower total cost, higher unit cost' problem is one of the reasons I love the way the EU mandates advertising prices. i.e. anything sold needs to have the price you actually pay on it (including VAT/other charges), and the cost per unit. (€/l or €/kg).

This saves me an absurd amount of planning/thinking as I can compare an equivalent cost number whenever I see a substitutable product somewhere. Also saves you from being fooled by your own assumptions, like when the unit cost of the largest cereal box is higher than a smaller one.

Re: The economics of dollar stores

#220

Post by Falling3 »

gambiting wrote: post #213
Falling3 wrote: post #191

Earlier quoted context omitted.

> And then the 1000% APR is argued that it's the actual cost of risk with these loans since they default so often. Isn't that a bit of a self-fulfilling prophecy?

I imagine they aren't defaulting because of the interest though - more that the borrower didn't even have the ability to repay the original amount at all.

Some of them - sure. But anyone who would've been able to repay the loan at a reasonable interest rate is still going to have an extremely difficult time with these APRs.
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