WEBVTT - PTG Classic: How do Dollar Stores stay in Business? 0:00:03.279 --> 0:00:07.200 Welcome to Part Time Genius, the production of iHeartRadio. 0:00:11.800 --> 0:00:13.200 Guess What Will? What's that Mango? 0:00:13.640 --> 0:00:15.920 So, if you're anything like me, you've probably noticed that 0:00:15.960 --> 0:00:18.800 there are a lot of different dollar store chains out there, 0:00:18.960 --> 0:00:21.480 Like pretty much everywhere you look, there's like a Dollar 0:00:21.520 --> 0:00:24.919 Tree or a Dollar General or a Family Dollar. There's 0:00:24.960 --> 0:00:27.320 a five below. I looked as up, there's a ninety 0:00:27.400 --> 0:00:30.600 nine cents only. I mean, it's just dollar stores all 0:00:30.640 --> 0:00:31.200 the way down. 0:00:31.360 --> 0:00:34.000 I feel, you know, I feel like maybe I haven't 0:00:34.040 --> 0:00:36.519 cataloged them quite as extensively as you have. I had 0:00:36.520 --> 0:00:38.839 forgotten this was one of your hobbies, but I will 0:00:38.840 --> 0:00:40.440 acknowledge there are a lot of them. 0:00:41.000 --> 0:00:42.840 So I looked into it this week, and it turns 0:00:42.840 --> 0:00:45.440 out that even though the stores seem the same, each 0:00:45.520 --> 0:00:48.560 brand actually targets a completely different market. 0:00:48.680 --> 0:00:50.440 So what does that mean? Exactly? 0:00:50.720 --> 0:00:54.440 Dollar General a friendly target's older customers in more rural areas, 0:00:54.600 --> 0:00:57.520 so they've intentionally built seventy five percent of their stores 0:00:57.560 --> 0:01:00.360 in small towns with fewer than twenty thousand people. And 0:01:00.440 --> 0:01:02.920 then on the opposite side, you've got things like five Below, 0:01:03.160 --> 0:01:05.959 and it's target demographic as teens and young adults. So 0:01:06.240 --> 0:01:08.520 you actually find those in suburban shopping malls. 0:01:08.840 --> 0:01:10.880 Actually, when you mentioned that the first time, I was 0:01:10.920 --> 0:01:12.800 I didn't remember that, But now that you say that, 0:01:12.880 --> 0:01:15.680 I can picture these being in shopping malls. So what 0:01:15.720 --> 0:01:19.160 about Dollar Tree and what was that you said? Family Dollar? Like, 0:01:19.319 --> 0:01:21.319 I know, I've seen both of those around. Who do 0:01:21.360 --> 0:01:21.880 they target? 0:01:22.080 --> 0:01:24.959 So what's weird is they're actually owned by the same company. 0:01:25.160 --> 0:01:28.160 Dollar Tree bought Family Dollar back in twenty fifteen for 0:01:28.560 --> 0:01:31.440 I believe it's nine billion individual dollars. 0:01:31.480 --> 0:01:33.640 Well, yeah, and a. 0:01:33.640 --> 0:01:36.560 Huge reason for that, bio was because Dollar Tree caters 0:01:36.600 --> 0:01:39.880 to middle income shoppers and Family Dollar goes after the 0:01:39.920 --> 0:01:42.640 lower income ones, and the company wanted both markets. 0:01:42.720 --> 0:01:44.880 Yeah, it's funny, but I feel like we do sort 0:01:44.880 --> 0:01:47.960 of treat these dollar chains interchangeably, like they're just kind 0:01:47.960 --> 0:01:50.520 of there. You really would never guess that behind the 0:01:50.560 --> 0:01:53.600 scenes they were playing this pretty intricate game with each other, 0:01:53.640 --> 0:01:55.680 like carving up the market in the way that they are. 0:01:55.920 --> 0:01:58.400 Yeah, there's actually way more going on with dollar stores 0:01:58.400 --> 0:02:00.680 than people might guess from you know, how they turn 0:02:00.720 --> 0:02:04.000 to profit, whether one dollar steaks are really a good 0:02:04.000 --> 0:02:06.040 deal after all? So why don't we dig in? 0:02:24.880 --> 0:02:29.960 Hey, their podcast listeners welcome to part time genius. I'm 0:02:29.960 --> 0:02:32.200 Will Pearson and as always I'm joined by my good 0:02:32.200 --> 0:02:34.400 friend mangesh Hot ticketter and on the other side of 0:02:34.400 --> 0:02:37.640 that soundproof glass testing out his latest fine from the 0:02:37.720 --> 0:02:42.040 dollar store. That's our friend and producer Loel Burlante. And 0:02:42.080 --> 0:02:44.160 what a fine this was. I mean, hold the box 0:02:44.240 --> 0:02:45.639 up again, Lull, I need to see it just a 0:02:45.680 --> 0:02:49.600 little bit higher. So it's basically a Nettie pot, except 0:02:49.639 --> 0:02:52.400 it's called a Yetti pot for some reason, and on 0:02:53.080 --> 0:02:55.119 the front called it a little bit closer. The front 0:02:55.160 --> 0:02:57.760 of the box shows a couple of what I presume 0:02:57.800 --> 0:03:02.080 are meant to be Yetti's wearying a teapot up its nose. 0:03:02.320 --> 0:03:04.440 It's kind of a weird, weirdge. 0:03:04.639 --> 0:03:07.520 At the time, but I would definitely pay two dollars 0:03:07.520 --> 0:03:11.160 for that, you know, twice twice as much. So I 0:03:11.400 --> 0:03:13.200 definitely want to talk about some of the other strange 0:03:13.240 --> 0:03:15.800 stuff that turns off, you know, at dollar stores. But 0:03:16.240 --> 0:03:18.120 why don't we start by getting a sense for just 0:03:18.160 --> 0:03:21.000 how big a success story dollar stores really are so 0:03:21.160 --> 0:03:23.320 they don't get a ton of respect. But in doing 0:03:23.360 --> 0:03:26.480 the research, Gate basically pointed out that they're kind of 0:03:26.480 --> 0:03:28.400 the unsung Kings of retail. 0:03:28.520 --> 0:03:29.840 Yeah. I don't know if this is true, but it 0:03:29.880 --> 0:03:32.480 feels like there are more dollar stores now than there 0:03:32.480 --> 0:03:35.520 were when we were growing up. It's definitely true. 0:03:35.560 --> 0:03:38.000 So dollar stores have been a fixture of American strip 0:03:38.040 --> 0:03:41.080 mall since the nineteen fifties, but one of their biggest 0:03:41.120 --> 0:03:43.480 booms came during the Great Recession of two thousand and seven, 0:03:43.520 --> 0:03:47.400 and as the economy declined, dollar store sales went way 0:03:47.520 --> 0:03:50.000 way up, and it resulted in this swell of like 0:03:50.080 --> 0:03:52.480 new stores opening up all over the country. But the 0:03:52.520 --> 0:03:56.480 really surprising part is that this popularity hasn't worn off 0:03:56.520 --> 0:03:59.440 like dollar stores just keep on thriving. And in fact, 0:03:59.480 --> 0:04:03.160 between two ten and twenty thirteen, the Family Dollar chain 0:04:03.240 --> 0:04:06.920 opened fifteen hundred new stores, which is more than one 0:04:06.960 --> 0:04:08.800 a day for four years in a row. 0:04:08.920 --> 0:04:11.960 Holy cow. And so I'm guessing insane. Yeah, I'm guessing 0:04:11.960 --> 0:04:14.760 it wasn't just a family Dollar doing this too. Yeah. 0:04:14.760 --> 0:04:17.640 So the other chains like Dollar Tree and Dollar General 0:04:17.839 --> 0:04:20.920 they were expanding too. Twenty thirteen ended up being this 0:04:20.960 --> 0:04:24.000 banner year for dollar stores, and in July of that year, 0:04:24.480 --> 0:04:26.839 so many new locations opened that it averaged out to 0:04:26.960 --> 0:04:29.800 one new store opening every six hours. 0:04:29.880 --> 0:04:32.800 All month long. That's interesting. It does feel like too 0:04:32.920 --> 0:04:36.159 many dollar stores, if we're being honest, So how many nights? 0:04:36.960 --> 0:04:39.760 You disagree strongly? So how many are we up to now? 0:04:40.520 --> 0:04:43.000 So all told, there are more than thirty thousand dollar 0:04:43.040 --> 0:04:45.200 stores in the US right now, and according to Forest, 0:04:45.200 --> 0:04:48.920 that's more locations than the six biggest US retailers put together. 0:04:49.040 --> 0:04:49.600 So that's like. 0:04:50.000 --> 0:04:55.359 Walmart, Walgreens, CBS, Costco, Kroger, and Home Depot that's on 0:04:55.400 --> 0:04:58.120 this list here. So you know, the wildest part is 0:04:58.120 --> 0:05:00.560 that analysts say new dollar stores will keep popping up 0:05:00.600 --> 0:05:02.839 like this for at least another three years before the 0:05:02.839 --> 0:05:03.760 demand levels out. 0:05:04.000 --> 0:05:05.719 You know, I'm guessing a good deal of that success 0:05:05.800 --> 0:05:07.840 is thanks to the strategy you were talking about at 0:05:07.839 --> 0:05:09.800 the beginning of the show, like the way dollar store 0:05:09.839 --> 0:05:12.760 brands tend to divvy up the market between themselves so 0:05:12.880 --> 0:05:15.800 together they've got a lock on really like every person 0:05:15.800 --> 0:05:18.240 who might potentially shop at a dollar store. 0:05:18.360 --> 0:05:20.880 That's right, And dollar stores really do have a much 0:05:20.880 --> 0:05:23.680 more mixed income clientele than you might guess, But that 0:05:23.760 --> 0:05:25.520 comes with some issues as well, Like one of the 0:05:25.520 --> 0:05:28.080 big concerns with having a high number of dollar stores 0:05:28.200 --> 0:05:31.360 is that the companies mostly target struggling communities when opening 0:05:31.400 --> 0:05:35.400 new locations, and as a result, a single small town 0:05:35.680 --> 0:05:37.720 or a city neighborhood can wind up with three or 0:05:37.760 --> 0:05:41.920 four different dollar stores but no actual grocery stores, which 0:05:42.160 --> 0:05:44.760 obviously is an ideal, since most dollar stores don't carry 0:05:44.760 --> 0:05:46.599 fresh fruits or vegetables or meats. 0:05:46.640 --> 0:05:49.279 All right, so dollar stores can and do contribute to 0:05:49.320 --> 0:05:52.800 the problem of what we call food deserts. But you're 0:05:52.839 --> 0:05:55.359 saying that high earners shop at dollar stores too. 0:05:55.480 --> 0:05:58.000 Yeah, and in much larger volume than you might expect. 0:05:58.040 --> 0:06:00.599 So according to this two thousand and six teen report 0:06:00.600 --> 0:06:04.440 from Reuters, twenty nine percent of millennial households earning more 0:06:04.480 --> 0:06:06.840 than one hundred thousand dollars per year say they shop 0:06:06.880 --> 0:06:09.520 at least one of the big three dollar chains. So 0:06:09.760 --> 0:06:12.480 all together, these choppers make up roughly, I guess, twenty 0:06:12.520 --> 0:06:14.960 five percent of the total sales from those three chains. 0:06:15.200 --> 0:06:16.480 And it's pretty. 0:06:16.200 --> 0:06:18.400 Shocking when you think about it, but it also makes 0:06:18.440 --> 0:06:20.839 sense since everyone you know likes a bargain. 0:06:21.080 --> 0:06:23.719 Yeah. Well, well, speaking of bargains, that was something I 0:06:23.760 --> 0:06:26.320 wondered about this week, Like, our dollar store price is 0:06:26.520 --> 0:06:29.440 actually a good deal, So of course we had to 0:06:29.480 --> 0:06:32.000 look into this, and it turns out that no, they're 0:06:32.040 --> 0:06:35.359 really not, or at least not always so. For example, 0:06:35.640 --> 0:06:38.719 dollar stores tend to sell milk in sixteen ounce bottles 0:06:38.760 --> 0:06:42.080 for one dollar each, which does sound like a steal, 0:06:42.080 --> 0:06:45.039 but at that rate, you're actually paying eight dollars for 0:06:45.120 --> 0:06:46.280 a full gallon. 0:06:46.279 --> 0:06:50.280 Which sounds like New York prices. Right, maybe don't shop 0:06:50.320 --> 0:06:52.279 for milk at dollar stores. But what about like the 0:06:52.360 --> 0:06:55.160 non perishable items, that kind of stuff like you wouldn't 0:06:55.160 --> 0:06:56.719 really see the same kind of markup. 0:06:56.440 --> 0:06:58.560 On, right, Well, it depends. I mean, you can end 0:06:58.640 --> 0:07:00.640 up with the same type of despair when you look 0:07:00.680 --> 0:07:04.039 at something like raisins or aluminum foil. Like. The trick 0:07:04.080 --> 0:07:07.360 in all of these cases is to offer familiar products 0:07:07.360 --> 0:07:11.400 in slightly smaller packages, so most shoppers don't spot the 0:07:11.440 --> 0:07:14.440 size differences or do an ounced ounce cost breakdown when 0:07:14.480 --> 0:07:17.000 they're in the aisle. But that said, there are some 0:07:17.240 --> 0:07:21.560 dollar store products that are generally solid deals, like toiletries 0:07:21.760 --> 0:07:24.360 paper goods, for example, and you can buy a roll 0:07:24.360 --> 0:07:27.160 of wrapping paper or a giant tub of cotton swabs 0:07:27.200 --> 0:07:29.440 for half the price that you would at a big 0:07:29.480 --> 0:07:31.160 buck store. So keep that in mind next time you're on. 0:07:31.320 --> 0:07:34.320 I love the idea of buying wrapping paper and just 0:07:34.880 --> 0:07:37.000 you know, putting it around cotton swabs, So I feel same. 0:07:37.080 --> 0:07:39.360 That makes a lot of sense to me. Yeah, well, 0:07:39.400 --> 0:07:41.720 there's another dollar store perk that I learned this week, 0:07:41.760 --> 0:07:44.040 because even though shopping at the dollar store may not 0:07:44.160 --> 0:07:46.480 always give you the most bang for your buck, it 0:07:46.640 --> 0:07:49.200 is a good way to satisfy your shopping craving on 0:07:49.280 --> 0:07:52.520 a budget. So if you're someone who enjoys going shopping, 0:07:52.560 --> 0:07:55.400 then you're probably familiar with the small rush of pleasure 0:07:55.440 --> 0:07:58.640 that comes from just making a purchase, and you can 0:07:58.760 --> 0:08:01.960 actually thank your brain for that. So whenever we anticipate 0:08:02.000 --> 0:08:04.840 a reward, which in this case would be buying something new, 0:08:05.200 --> 0:08:08.800 our brains respond by triggering this kick of dopamine. So 0:08:08.880 --> 0:08:12.160 for an average shopper, the more things you buy, the 0:08:12.200 --> 0:08:13.800 more dopamine levels. 0:08:13.600 --> 0:08:16.320 Rise, which you know, I guess is why some people 0:08:16.400 --> 0:08:17.720 become compulsive shoppers. 0:08:17.760 --> 0:08:20.320 Right, Yeah, that's exactly right. And so that's where dollar 0:08:20.360 --> 0:08:23.400 stores come in because for most people, the pleasure we 0:08:23.440 --> 0:08:26.320 get from shopping doesn't always scale with the amount of 0:08:26.400 --> 0:08:30.000 money we're spending, so instead it's that number of items 0:08:30.040 --> 0:08:32.719 that we might buy. So each one translates into its 0:08:32.760 --> 0:08:36.000 own little kick of dopamine. How the next time you 0:08:36.000 --> 0:08:38.559 feel the urge for a shopping spree, you might want 0:08:38.559 --> 0:08:40.560 ahead to your local dollar store because you can fill 0:08:40.559 --> 0:08:43.040 the basket on the cheap and still walk out feeling 0:08:43.240 --> 0:08:45.480 like a million bucks. I'm sure that's exactly how it 0:08:45.480 --> 0:08:47.520 would play out to all. 0:08:47.480 --> 0:08:49.480 Right, well, now that we've talked a little bit about 0:08:49.520 --> 0:08:51.679 who's shopping at dollar stores, let's look at some of 0:08:51.720 --> 0:08:52.880 the products that they're buying there. 0:08:53.080 --> 0:08:54.520 But first, a quick break. 0:09:01.760 --> 0:09:01.840 And. 0:09:08.360 --> 0:09:10.400 You're listening to part time Genius and we're talking about 0:09:10.440 --> 0:09:13.120 the best and worst deals to be had at the 0:09:13.240 --> 0:09:15.719 dollar store. Now, speaking of which, the time has come 0:09:15.760 --> 0:09:18.520 at last, Mango, we need to talk about the one 0:09:18.679 --> 0:09:19.839 dollar steaks. 0:09:20.240 --> 0:09:23.120 I love, like how offended you were by this, Like 0:09:23.120 --> 0:09:25.920 we were talking about this beforehand. It just feels ridiculous. 0:09:26.200 --> 0:09:27.839 And it's not like someone's actually going to force you 0:09:27.880 --> 0:09:28.760 to eat one of these. 0:09:29.679 --> 0:09:32.679 It's the principle of the thing, Mango. But I feel 0:09:32.679 --> 0:09:34.720 like we should back up a minute because some listeners 0:09:34.720 --> 0:09:36.839 out there might be a wee bit confused by all 0:09:36.840 --> 0:09:39.240 of this talk of a one dollar steak. So we 0:09:39.360 --> 0:09:43.160 mentioned earlier that dollar stores don't usually carry fresh foods, 0:09:43.679 --> 0:09:46.360 but a growing number of them do stock frozen foods 0:09:46.400 --> 0:09:49.160 now And one of the best or worst deals is 0:09:49.200 --> 0:09:52.440 the one dollar ribbi and the Dollar Tree freezer section. 0:09:52.960 --> 0:09:55.959 So these four ounce boneless beef steaks are sold pre 0:09:56.080 --> 0:09:59.920 season in a brine, and they're what's called the utili 0:10:00.080 --> 0:10:01.800 the cut I guess, which are the parts of the 0:10:01.840 --> 0:10:05.760 cow used in institutional kitchens. So the steaks Dollar Tree 0:10:05.760 --> 0:10:09.320 sells are sourced from a company called Stampede Meat Ink. 0:10:09.360 --> 0:10:11.240 I'm really jealous. I wish I had started a company 0:10:11.240 --> 0:10:12.320 called Stampede Meat Ink. 0:10:12.840 --> 0:10:14.640 It's like the worst new It sounds like they sell 0:10:14.679 --> 0:10:17.560 steaks made from cows. I got trampled by bigger cows. 0:10:18.920 --> 0:10:22.520 Well you never know, but if you're feeling adventurous, you 0:10:22.520 --> 0:10:24.840 can buy one of these one dollar stakes for yourself 0:10:24.880 --> 0:10:27.880 at any dollar Tree with a freezer section. And if 0:10:27.920 --> 0:10:30.400 you read the reviews online, a lot of people compare 0:10:30.440 --> 0:10:33.480 the meat to you know, say rubber, or maybe they 0:10:33.520 --> 0:10:36.079 just say it doesn't cook that well. So I'm really curious. 0:10:36.120 --> 0:10:39.600 Now, so did you find anyone who actually liked these 0:10:39.600 --> 0:10:40.400 one dollar sticks? 0:10:40.760 --> 0:10:43.920 I did find one positive review, but even then, the 0:10:43.920 --> 0:10:46.880 woman who actually bought the steak. She didn't like it, 0:10:47.600 --> 0:10:50.800 So why is that? Why is that a positive review? Well, 0:10:50.800 --> 0:10:54.680 because her dog apparently did love it, So to be fair, 0:10:54.720 --> 0:10:59.120 I did come across some surprisingly measured responses from actual humans. So, 0:10:59.200 --> 0:11:02.560 for example, in twowenty sixteen, a TV station in Cincinnati 0:11:02.640 --> 0:11:05.959 held a taste test for local firefighters. So they were 0:11:06.000 --> 0:11:09.240 asked to sample a butcher's cut, a supermarket cut, and 0:11:09.320 --> 0:11:12.400 of course the one dollar ribi. And the reactions were 0:11:12.400 --> 0:11:15.480 mixed among the firefighters you might expect, but some of 0:11:15.480 --> 0:11:19.200 the more positive views were it's not terrible and I 0:11:19.280 --> 0:11:22.640 guess it was meat. I guess interview. 0:11:24.960 --> 0:11:27.320 Okay, so here's another product you probably didn't know you 0:11:27.320 --> 0:11:29.120 could buy at the dollar store, or at least I 0:11:29.120 --> 0:11:30.760 didn't know you could buy it, And that's a home 0:11:30.800 --> 0:11:34.640 pregnancy test kit. But unlike those one dollar ribbis, these 0:11:34.640 --> 0:11:37.480 pregnancy kits are actually worth the money. In fact, the 0:11:37.480 --> 0:11:39.920 ones carried at a lot of I guess the dollar 0:11:39.960 --> 0:11:42.920 tree stores are the same kind used in most hospitals. 0:11:43.160 --> 0:11:45.360 Oh wow, I mean, maybe this is a bit unfair, 0:11:45.360 --> 0:11:48.280 but I'd be so hesitant to trust a one dollar 0:11:48.360 --> 0:11:52.440 pregnancy test. I mean, that feels so cheap for that purpose, Like, 0:11:52.480 --> 0:11:54.040 how could it actually be reliable? 0:11:54.200 --> 0:11:56.400 So I was wondering about this myself, and it turns 0:11:56.440 --> 0:11:59.520 out the tests are actually pretty reliable. And that's because 0:11:59.559 --> 0:12:02.800 most and tests are made to detect just one specific 0:12:02.840 --> 0:12:06.160 hormone that's produced during pregnancy. It's like a simple enough 0:12:06.200 --> 0:12:08.720 task that most kits can pull it off regardless of 0:12:08.760 --> 0:12:10.800 the price. But you know, that's not to say there 0:12:10.800 --> 0:12:13.640 aren't advantages to using a more expensive test. You know, 0:12:13.720 --> 0:12:16.280 they can often detect lower amounts of that same hormone 0:12:16.400 --> 0:12:18.800 earlier in the pregnancy, so you know, a Dollar Store 0:12:18.880 --> 0:12:21.000 kit might not show that the woman is pregnant until 0:12:21.000 --> 0:12:22.200 a little later in the pregnancy. 0:12:22.280 --> 0:12:24.640 I do love how the steak is super shady, but 0:12:24.720 --> 0:12:27.719 like the pregnancy test, we feel like they're so trustworthy. 0:12:28.400 --> 0:12:30.120 I guess it kind of balances each other out. 0:12:30.200 --> 0:12:32.080 Well. What's funny is that, like one of the other 0:12:32.360 --> 0:12:35.600 items that Dollar Tree carries that's supposedly like this hidden 0:12:35.640 --> 0:12:39.160 gem is their ovulation predictor. It actually has one of 0:12:39.200 --> 0:12:42.720 the highest product rankings of all the Dollar Tree items. 0:12:42.760 --> 0:12:45.320 I guess it's got four point six stars, and the 0:12:45.320 --> 0:12:47.400 customer reviews say it works just as well as the 0:12:47.400 --> 0:12:48.280 more expensive brands. 0:12:48.440 --> 0:12:49.920 I feel like we might just have to take their 0:12:49.960 --> 0:12:51.880 word for that, But for now, I thought we could 0:12:51.880 --> 0:12:54.840 switch gears and talk about something I've always wondered about, 0:12:54.880 --> 0:12:57.840 which is how dollar stores actually make money. 0:12:57.960 --> 0:12:59.679 I feel like it's just through something a lot of 0:12:59.720 --> 0:13:01.200 staate and pregnancy cuts. 0:13:01.440 --> 0:13:03.559 That's all there is. I mean, I guess that is true, 0:13:03.559 --> 0:13:06.080 but I meant more like, how do dollar stores turn 0:13:06.120 --> 0:13:09.360 a profit off of these, you know, really inexpensive products. 0:13:09.400 --> 0:13:11.400 But before we get into that, let's take one more 0:13:11.480 --> 0:13:28.280 quick break and welcome back to part time genius. All right, Mango, 0:13:28.440 --> 0:13:30.560 So another thing I was curious about this week is 0:13:30.600 --> 0:13:34.240 how dollar stores managed to turn profits off of you know, 0:13:34.240 --> 0:13:37.720 these really inexpensive items. Because I found some sales figures 0:13:37.760 --> 0:13:40.000 from a few years back, and I was shocked to 0:13:40.000 --> 0:13:43.160 see that Dollar Tree makes thirty five cents of profit 0:13:43.559 --> 0:13:46.800 for each dollar of revenue, compared to twenty four cents 0:13:46.800 --> 0:13:49.800 per dollar that you know, a place like Walmart makes, which. 0:13:49.600 --> 0:13:51.840 Is surprising because you always hear about how well Walmart 0:13:51.880 --> 0:13:53.920 negotiates down prices, you know, just because of all the 0:13:54.000 --> 0:13:54.800 volume they sell. 0:13:55.040 --> 0:13:57.040 Right, So it made me wonder like, is it just 0:13:57.080 --> 0:13:59.720 the high sales volume at a dollar store that helps 0:13:59.800 --> 0:14:02.720 make up for the low prices or is there more 0:14:02.760 --> 0:14:05.559 going on? And what I found is that while volume 0:14:05.640 --> 0:14:08.000 does play a huge part, a lot of what makes 0:14:08.040 --> 0:14:11.400 dollar stores profitable is that they have this no frills 0:14:11.440 --> 0:14:14.920 approach to the shopping experience. For instance, at a big 0:14:14.960 --> 0:14:17.760 box store like a Walmart, you're looking at nearly two 0:14:17.920 --> 0:14:21.400 hundred thousand square feet of shopping space. They're just enormous. 0:14:21.440 --> 0:14:24.440 But I meanwhile, the average Dollar general is just over 0:14:24.560 --> 0:14:27.440 seven thousand square feet. I guess that's a smaller box. 0:14:27.520 --> 0:14:30.880 It's a much smaller boxing. Maybe even if you're not 0:14:30.920 --> 0:14:33.240 good at math, like that is a much smaller boxing. 0:14:33.760 --> 0:14:37.440 Not only does the smaller footprint translate into lower leasing costs, 0:14:37.520 --> 0:14:39.480 it also means that the dollar stores don't need to 0:14:39.520 --> 0:14:42.920 hire as many workers. In fact, a typical dollar store 0:14:42.960 --> 0:14:45.640 staff is made up of just eight or nine people, 0:14:46.000 --> 0:14:49.640 while the average Walmart staff is closer to three hundred people. 0:14:50.000 --> 0:14:52.479 So all of this together helps keep down the overhead 0:14:52.520 --> 0:14:55.240 cost and that, along with the high volume of sales, 0:14:55.320 --> 0:14:57.440 is why dollar stores are some of the most profitable 0:14:57.480 --> 0:14:59.560 stores in the entire retail sector. 0:15:00.080 --> 0:15:01.960 You know, since we're talking about what sets dollar stores 0:15:02.000 --> 0:15:04.560 apart from their larger cousins. I do want to highlight 0:15:04.640 --> 0:15:07.200 what is probably my biggest beef with these, you know, 0:15:07.320 --> 0:15:10.120 quote dollar stores, which is that, you know, somewhere along 0:15:10.160 --> 0:15:12.680 the line, most dollar stores became dollar and up stores, 0:15:12.880 --> 0:15:16.120 like even ninety nine cents only stores now sell products 0:15:16.120 --> 0:15:18.320 for more than ninety nine cents. So now you can 0:15:18.360 --> 0:15:20.800 walk into dollar stores and find items that cost two, 0:15:21.000 --> 0:15:22.720 five and as much as ten dollars. 0:15:23.000 --> 0:15:26.120 Yeah, more like multi dollar stores, I guess, yeah, just 0:15:26.160 --> 0:15:30.520 like regular stores, which feels like borderline false advertising, but 0:15:30.840 --> 0:15:33.640 you know, it's become pretty accepted at this point. So 0:15:34.040 --> 0:15:37.240 none of the big dollar chains still charge just a dollar. 0:15:37.440 --> 0:15:40.600 We actually looked into this, and it seems that I 0:15:40.640 --> 0:15:43.080 guess the one dollar pricing has been Dollar Trees claim 0:15:43.120 --> 0:15:45.960 to fame for their entire existence. For the thirty three 0:15:46.040 --> 0:15:48.040 years it's been in business, the company has always stuck 0:15:48.040 --> 0:15:51.960 to its original policy. And you know that that's despite 0:15:52.000 --> 0:15:57.400 like inflation, despite growing competition, manufacturing costs, whatever, like, despite 0:15:57.400 --> 0:15:59.720 all of that, Dollar Tree execs have kind of stood 0:15:59.760 --> 0:16:02.200 by this one dollar policy for everything in their store. 0:16:03.200 --> 0:16:05.280 I'm guessing there's a butt coming to this. 0:16:05.920 --> 0:16:09.200 Yeah, So the company finally bowed to pressure from some 0:16:09.240 --> 0:16:12.280 of its investors recently, and according to a company statement 0:16:12.360 --> 0:16:15.680 made in March twenty nineteen, Dollar Tree has now begun 0:16:15.800 --> 0:16:18.560 testing additional price points in some of its stores. And 0:16:18.920 --> 0:16:21.880 you know, if the move boosts profits at the test stores, 0:16:22.120 --> 0:16:24.440 like the investors hope it'll do, then chances are will 0:16:24.480 --> 0:16:26.920 likely be seeing you know, dollar plus items in all 0:16:26.960 --> 0:16:28.800 their store shelves before the year's out. 0:16:29.160 --> 0:16:31.800 Yeah, So in other words, stock up on those one 0:16:31.880 --> 0:16:33.120 dollar ribis. 0:16:33.200 --> 0:16:35.280 Right, because you know, they could be three dollars ribis 0:16:35.360 --> 0:16:36.640 or whatever in the. 0:16:36.640 --> 0:16:38.960 Next few years. I mean, it is kind of sad though, 0:16:39.000 --> 0:16:41.440 like these may very well be the final days of 0:16:41.480 --> 0:16:44.280 the last true dollar store if you think about it. Yeah, 0:16:44.280 --> 0:16:45.120 it's the end of an era. 0:16:45.240 --> 0:16:47.360 But if you're looking for something that you can still 0:16:47.360 --> 0:16:49.600 get on the Super Chief, we've got a boatload of 0:16:49.640 --> 0:16:52.560 facts at very reasonable prices. So why don't we do 0:16:52.600 --> 0:17:05.200 the fact off? Okay, so we started the show talking 0:17:05.200 --> 0:17:07.879 about how dollar stores are pretty much everywhere these days, 0:17:07.880 --> 0:17:09.679 and it feels like one is never more than a 0:17:09.680 --> 0:17:11.320 few miles away at any given. 0:17:11.119 --> 0:17:13.960 Time, And it turns out that's actually true. 0:17:14.040 --> 0:17:17.520 So Dollar General has over fifteen thousand stores spread throughout 0:17:17.520 --> 0:17:20.320 forty four states, and according to the company, that means 0:17:20.320 --> 0:17:23.520 seventy five percent of the US population now lives within 0:17:23.720 --> 0:17:25.560 just five miles of one of its stores. 0:17:25.680 --> 0:17:27.280 All right, well, here's a quick one. So when you're 0:17:27.320 --> 0:17:29.639 in the big box stores, you really think of the 0:17:30.040 --> 0:17:33.240 tricks that they use to get people to go for 0:17:33.280 --> 0:17:36.159 the impulse buys or things like that, and actually dollar 0:17:36.160 --> 0:17:39.000 stores use many of the same tricks. So, for example, 0:17:39.080 --> 0:17:41.720 drug stores tend to put food and drinks up front 0:17:41.800 --> 0:17:45.119 to act as these impulse buys, but the actual pharmacies 0:17:45.160 --> 0:17:47.639 are tucked in the very back of the store, and 0:17:47.720 --> 0:17:50.919 dollar stores act under the same principle. So food and 0:17:51.040 --> 0:17:53.320 toys are stocked in the back of the store since 0:17:53.320 --> 0:17:56.320 they tend to be the most popular items, and seasonal 0:17:56.320 --> 0:18:00.000 impulse buys go right up front near the registers. So unfortunately, 0:18:00.200 --> 0:18:03.160 one place where dollar stores do different from larger stores 0:18:03.240 --> 0:18:07.200 is that they typically don't offer employee discounts, so unless 0:18:07.200 --> 0:18:10.440 a product is damaged or open on the shelf, employees 0:18:10.520 --> 0:18:13.359 have to pay the full dollar like everybody else. 0:18:13.520 --> 0:18:16.160 Well, paying full price is always a drag, but if 0:18:16.200 --> 0:18:18.439 you ask some dollar store employees, they'll tell you that 0:18:18.520 --> 0:18:20.480 the worst part of their job is having to deal 0:18:20.560 --> 0:18:23.919 with the dreaded Hot Wheels toy collectors. And that's actually 0:18:23.960 --> 0:18:27.520 not exclusive to dollar stores either, So over zealous hot 0:18:27.560 --> 0:18:30.200 Wheels fans are actually kind of the bane of any 0:18:30.280 --> 0:18:31.760 retail store that stocks them. 0:18:31.960 --> 0:18:34.080 Really, I don't get it. What's so bad about kids 0:18:34.080 --> 0:18:35.439 who collect toy cars? 0:18:35.720 --> 0:18:38.200 So nothing at all. It's actually the adults who collect 0:18:38.240 --> 0:18:40.920 toys that are the problem. And there's a big community 0:18:40.920 --> 0:18:43.239 of adult Hot Wheels fans out there, and they're kind 0:18:43.280 --> 0:18:46.159 of infamous for well, I mean, you can call it 0:18:46.200 --> 0:18:49.240 their dedication. So Metal Flow has had a piece last 0:18:49.280 --> 0:18:51.800 year where they spoke to a Dollar Tree manager named Nate, 0:18:52.080 --> 0:18:54.560 and according to him, these so called hot Wheels hunters 0:18:54.600 --> 0:18:57.639 will quote scour the Internet and find out when stores 0:18:57.640 --> 0:19:00.320 are getting shipments, then show up and demand I go 0:19:00.400 --> 0:19:02.280 to find the one box of hot Wheels out of 0:19:02.280 --> 0:19:04.320 two thousand other boxes so that they can be the 0:19:04.359 --> 0:19:05.719 first to buy them. 0:19:06.080 --> 0:19:08.200 I mean that does sound like a headache for the employees, 0:19:08.280 --> 0:19:10.560 especially if these guys are showing up like every week 0:19:10.640 --> 0:19:11.080 to do this. 0:19:11.359 --> 0:19:12.879 I mean, it's more of a nightmare than that they 0:19:13.040 --> 0:19:15.160 ferently show up every day in a lot of cases, 0:19:15.359 --> 0:19:18.200