Should a dollar store maintain the dollar price point by reducing product quantity? Or should it abandon the dollar price point and begin offering an array of more-expensive goods?
William Fisher Jr. opened the door to his office and pointed to the metal folding table in the corner. It was the one his father had bought in 1957, the year he founded Dollar Bill’s, and staffers now jokingly—but lovingly—referred to it as “the executive conference table.” Today it was covered with packs of candy, stationery items, bottles of water, tiny action figures, and countless other knickknacks.
By 2023 Dollar Bill’s had more than 15,000 stores in the United States and Canada and was generating $25.5 billion in net sales. Although customer traffic was down 13% year over year, the average customer expenditure had increased by 18%, to approximately $10 a visit. But Dollar Bill’s was still underperforming against competitors: Margins were shrinking, and shareholders had begun pushing for changes in strategy. William fought them at almost every meeting.
“I know margins have thinned,” he continued. “But Bobby has suggested another solution: repackaging the merchandise so that we’re taking a bit more margin while giving customers almost as much as they had before.I’m not completely sold on the idea, because I still worry that our customers will notice the change and view it as a betrayal. But it’s something to consider.”
“That’s my concern,” William said. “We need them to trust us, and shrinking our packages feels like a bait and switch. What do you think, Robin?” “I trust you more than anyone,” William said. “But I’ve spoken to several other analysts, and they see bigger risks in that strategy.” Do you agree with this assertion? Or are people more likely to turn to affordable treats, as Leonard Lauder claimed when Estee Lauder saw lipstick sales rise despite a tough economy in 2001?Bobby replied immediately: “Sticking to one price point no matter what’s going on in the economy has always been our hallmark. In my view, if we’re offering goods at a range of prices, then we’re no different from any other discount store.
He should start by evaluating every product—or SKU in industry parlance—that Dollar Bill’s retails to see which can still be sold for one dollar while achieving a sustainable margin. He can keep those items on the shelves. I understand William’s attachment to the name Dollar Bill’s. But if that needs to change to reflect the new brand proposition, it can. After all, if you drop the possessive apostrophe, you have Dollar Bills, plural.is the vice president of pricing at Michaels Stores and a former senior vice president of commercial strategy for Bed Bath & Beyond.
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