Dollar General, like its shoppers, weathers tough times

The Dollar General store on Kings Highway in Cherry Hill is one of 40 in the eight-county South Jersey region. The company has been undergoing an expansion in the current fiscal year.
The Dollar General store on Kings Highway in Cherry Hill is one of 40 in the eight-county South Jersey region. The company has been undergoing an expansion in the current fiscal year. (TOM GRALISH / Staff Photographer)
Posted: September 27, 2013

Four years ago, Jacqueline Horne lost her job as a business agent for a union and became a regular shopper at the Dollar General store in Pennsauken.

On a recent visit, the 46-year-old mother of two, who now works part time at a Wal-Mart store, bought cleanser for 50 cents, candy for $1, press-on nails for $1 (she said she can't afford to get her nails done), and spices for $2.25, the most expensive item in her cart.

"Actually, it turns out to be cheaper," Horne said of items at the Dollar General at 3400 Haddonfield Rd., on the border of Pennsauken and Cherry Hill. "When you're on a budget in this economy, you watch everything.

"They really do have everything you need."

Horne is a typical Dollar General customer - annual household income of $40,000 or less, cost-conscious, loyal - and part of why the company is undergoing a major expansion nationwide. A total of 650 new stores will open this year, with nearly a dozen new ones in South Jersey.

There are now 40 Dollar Generals in the eight-county South Jersey region and 31 in the five-county area in Pennsylvania - though none are in Delaware County. Nineteen stores are within the Philadelphia city limits.

Though shoppers like Horne are sold on DG's prices, the Goodlettsville, Tenn., company has flourished not just in bad economic times and a tight labor market. Dollar General Corp. has had 23 consecutive years of same-store sales growth (stores open a year or more) - about a third of the company's 75-year history.

Economists say that as long as Dollar General gives the "impression" of cheaper prices, the stores will continue to do well. "These stores obviously flourish when the economy is weak or growth is slow," said Joel Naroff, president of Naroff Economic Advisors Inc. and an Inquirer business columnist. "In the current environment, where incomes are flat, [consumers] hold out hope that spending power can be maintained.

"But the stores are also a good place to go for low- and middle-income households who don't want to pay even Wal-Mart prices for goods," he said.

The formula has resonated well: Open in convenient, highly accessible locations, keep the stores well-stocked with name-brand merchandise, and stay open late (10 p.m. at most locations Mondays through Sundays).

Dollar General grossed $16.02 billion in sales companywide for the fiscal year that ran from Feb. 1, 2012, to Jan. 31, topping the previous fiscal year's $14.81 billion.

The first Dollar General opened in Scottsville, Ky., in 1955, and the company has been adding stores at a rapid clip since. It is now the largest discount retailer in the United States based on number of stores - more than 10,700 in 40 states.

"We have research that shows our customers come to us within a three- to five-mile radius or within a 10-minute drive," company spokeswoman Crystal Ghassemi said. "Our customers look for value and convenience.

"When we look at opportunities and locations to open new stores, we look at convenience, competitive factors in an area, traffic [patterns], and demographics of the community to make sure it will support the store."

The company is expanding heavily in the Northeastern United States. A $120 million distribution center will open in Bethel, Pa., at the end of the year to serve stores in South Jersey and Philadelphia that are now served by a distribution center in South Boston, Va.

The store's trademark sign is no frills - "Dollar General" with a yellow background. On its website, the company boasts of how it saves shoppers time and money.

"Their stuff is awesome," John Scalzo, 50, of Pennsauken, said Friday as he filled his cart with boxes of cereal, milk, and trash bags at the store on Haddonfield Road, one of two in Pennsauken. "It's all name-brand stuff, and that's what's amazing."

Scalzo, who supplies food and other items to ships, is a comparison shopper. He picked up a 200-yard box of Glad cling wrap for $3.

"It's $4.25 at other regular supermarkets," he said.

The box of Cheerios?

"$2.50 here and $4.65 at ShopRite," he said without pausing.

With its growth and focus, Dollar General appears to have become like its following - able to weather any economy.

"Even at Dollar General, where prices are not just a dollar, people have the impression that the prices are always lower than elsewhere," Naroff said. "As long as that impression is maintained, these stores are going to do fine, even when the economy improves."

On their way home after visiting Cherry Hill Mall this week, Malai Phien, 23, and her two young children and sister-in-law stopped at the Dollar General store at 701 Kings Highway N. in Cherry Hill. That evening, it had clothes on a discount rack, cases of soda, and charcoal outside for sale.

Phien said she also frequented the Dollar General store on Woodland Avenue near her Southwest Philadelphia rowhouse.

"It's like a neighborhood store," she said. "You can go in and out without having to travel far, and the prices are reasonable."

Milton Ekonomou, 33, of Pennsauken, wheeled out a cart with three large jugs of detergent, pasta, bread, and other items. His bill on Tuesday at the Cherry Hill Dollar General store: $49.47.

"The White Rain for Men [shampoo] - which is for me - goes for $1.50 here," he said. "It's at least $3 or $4 at other stores. Bread is 85 cents here.

"It comes down to the deals, and the products are really good," he said.

But the father of four children, 3, 4, 5, and 7, who is a certified nursing aide in Moorestown, had another reason for pinching pennies.

"They're all getting older, and each has extracurricular activities," he said as he unloaded the items into a black 2002 Buick Rendezvous. "It's all for them.

"Every little dollar does count."


BY THE NUMBERS

650

Dollar General stores opening between Feb. 1 and Jan. 31, 2014.

40

Dollar General stores in the eight-county South Jersey region.

31

In the five-county metropolitan Philadelphia area.

19

Stores in Philadelphia.

$40,000

(or less) Average annual income of Dollar General customers.


 

 


sparmley@phillynews.com856-779-3928 @SuzParmley

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