COVER STORY
( Walmart and Target ) as their primary grocery shop . Warehouse clubs ( Costco , Sam ’ s Club ) were the primary shopping destination for 8 % of customers whereas 6 % bought groceries primarily online .
Omni-Channel Retailing
The year 1995 was a landmark year for global retailing in general and American retail in particular . The belligerent retailers initially undermined the power of online retailing . Market surveys highlighted the importance of the ‘ touch and feel ’ factor . Retailers thought it would remain a niche forever and they had strengths to overpower it .
Any innovation initially appears fad or fashion . The market considers it as a strong trend only when the market leader adopts it . Walmart entered online retail in the year 2007 but without any funfair . The annual report had not even taken notice of it . Until the year 2019 , the online sale share in Walmart ’ s overall sales was just 5 %. The American store war got a new battle , ‘ Non-Store War ’. Amazon and eBay started selling products online . Initially , marketers thought the customer segment for online retailing was different . Techno-savvy customers would use the online option and major customer groups would prefer the touch and feel factor and hence offline retailing . But over a period of time , it proved to be a myth .
The American customers are transforming the retail market into an ‘ Omni-Channel ’ marketplace . As of 2021 , online sales in America is about 15 % of the total retail sales . Retailers who were successful offline became successful retailers online , barring a few exceptions . The format which offered a better online experience to their existing customers were successful in retaining them .
Amazon initially became successful online without an offline presence . But they couldn ’ t make a dent in food retailing even after becoming a leading online retailer for general merchandise . Stores started services like home delivery , order and pick up from the nearest store etc . Amazon responded to this trend by taking over the supermarket chain , ‘ Whole Foods ’ for $ 13.7 billion , in the year 2017-18 . They also started a chain of stores , ‘ Amazon fresh ’ in August 2020 . In a year they added 16 stores and plan to grow at the rate of up to 30 stores per year . American war also has many other battles like the Battle of Dollar Stores , Battle of Supermarkets , Battle of Warehouse , Battle of Discounters , Battle of Department Stores , Battle of DIY stores , Battle for office supplies , and the battle for home furnishing and improvement .
Dollar Stores Battle
Dollar stores are one of the fastestgrowing segments in American retailing . Dollar stores created a huge scale of the number of stores . A fierce fight has been going on between the market leader , Dollar General , and the challenger Dollar Tree / Family Dollar combine . Other players like Big Lots and 99 Cents are also in the fray . During the earlier battle , Dollar Tree defeated Family Dollar and swallowed it . Now the ‘ dollar store battle ’ is even fierce with two equally strong companies , Dollar General ( the market leader ) and Dollar Tree ( the challenger ).
“ Customers don ’ t just compare a supermarket with another , they weigh it against superstore , warehouse store and other store formats where they usually buy . Such consumer behavior puts pressure on retailers because their sphere of competition increases considerably .”
How are Dollar stores fighting the battle ? Dollar stores play on their strengths . Even in the pandemic year , 2020 , net sales of Dollar General increased by 21.6 % to $ 33.7 billion . Dollar tree also recorded a 6.1 % growth rate .
Dollar Tree had been selling all products below the $ 1 price ( though it is also selling products at other price points after the acquisition of Family Dollar ).
Dollar General sells products at deep discounts , at different price levels ,
90 % below $ 10 , rarely above $ 10 but always below $ 30 .
Dollar General ’ s business model is defined as : “ providing a broad base of customers with their basic everyday and household needs , supplemented with a variety of general merchandise items , at everyday low prices inconveniently located , small-box stores ”.
One-third of the SKUs of Dollar General are famous national brands that are available at a price that is 20 to 40 % cheaper than big-box retailers , supermarkets and pharmacy stores . They attract price-sensitive customers . Although a limited range , they try to provide a ‘ one-stop shop ’ with convenience and discounts on domestic consumables .
Dollar stores have created a huge scale with the purpose to have reach , bargaining muscle , and supply chain economics . As of Feb-2021 , Dollar General had 17,266 stores , resulting in approximately 75 % of the U . S . population living within five miles or less of one of their stores .
Dollar General ’ s slogan is , ‘ Save time , save money , every day . They deliver highly competitive prices at convenient locations while focusing on ‘ easy in , easy out ’. They operate a ‘ small box ’ retail model to reduce the rent while providing the convenience of locating the merchandise and billing it faster . The average store size of Dollar General is 7,400 square feet ( selling area ).
Dollar General stores are situated in small towns , 75 % of the stores are in towns with less than 20,000 population and where they have limited shopping options . Locations are near residential areas because they seek more frequent customer visits with a higher loyalty . These small stores and rural locations save rent .
Big box retailers ( with a store area of more than 100,000 square feet ) target a greater number of items per bill and higher value per bill whereas small box retailers focus a greater number of visits . With this perspective , Dollar General has tailored its product offering that includes most necessities such as basic packaged and frozen food , dairy products , cleaning supplies , paper products , health and beauty care items , greeting cards and other stationery items , basic
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