Why Food At The Dollar Store Is Really So Cheap

Why Food At The Dollar Store Is Really So Cheap

December 3, 2019 100 By Ewald Bahringer


How are dollar stores are able to sell food
for so cheap and still turn a profit? The answer to that question is a calculated
formula that dollar stores have devised to keep prices low, and we’re going to break
it down. Location is the name of the game in business
and if a company wants to be in the busy part of town it’s going to cost them. However, it’s not uncommon to see dollar stores
in lower-income sections of a city, or in a totally rural area. It’s a smart business move, and choosing to
operate in areas that Target, Walmart, or Whole Foods won’t bother to go has proven
highly effective for the growth of dollar stores. Opening and operating in these areas is simply
less expensive and this helps keep prices down. Many dollar stores don’t buy the land their
stores are on either, which means that if they’re not doing well, they can just pick
up and move. If a Dollar General can keep the lights on
and skip out on the pricey property taxes that a Publix is going to pay, it’s going
to be able to sell its food for much cheaper. Yes, you’ll find nationally-known brands that
you’re familiar with in the dollar store, but you’re also likely to see a lot of brands
that you’ve never seen in Walmart or other grocery stores. This is because many of the brands on the
shelf are the dollar store’s own brands. By going the private route, dollar stores
are able to have lower margins since they don’t have to deal with buying from a major
label. Dollar General, for example, can cut back
on buying peanuts from Planters and coffee from Folgers by offering these goods under
its own Clover Valley label. Dollar General CEO Todd Voss said that the
store’s own private brands were, quote, “an important part of our strategy” in driving
sales. And, because they cost dollar stores less
money, they’re often priced considerably lower than name-brand products. Plus, according to Fortune, Dollar General
sells no more than 10,000 products in its stores, while a Walmart might stock ten times
that number. By selling a limited selection of popular
national brands, dollar stores have a much smaller inventory to keep track of and can
maximize their smaller space. Are you sensing a theme here with dollar stores
in regards to keeping things small? Well, that’s also going to factor into those
super cheap, only-a-buck prices you’re getting on food too. If you want a jumbo size bottle of barbecue
sauce then hit up a Sam’s Club, however, if a 10-ounce bottle will do, then your local
dollar store has you covered. Dollar stores like Dollar Tree may offer not
just fewer varieties of a product, but often smaller sizes than what you might normally
find at a supermarket. To some, these might seem like “travel size”
portions, but according to Fortune, the stores are going after only what customers can afford
at the moment. But, there’s a catch. When compared to the size of products that
a shopper might find in a grocery store or Walmart, the dollar price doesn’t always translate
to a good deal. For example, ABC Action News found that buying
a box of Ritz Crackers at both dollar stores and then at WalMart cost $2.50, but the dollar
store boxes contained three ounces less. The same often happens to be true for other
foods like milk, flour, and chips. One might assume that if all the stuff in
your basket are $1 each or just a few bucks more, you’re probably not getting very good
quality. And yes, in some cases the food at a dollar
store can be pretty bad. Sometimes, you just get what you pay for. “I wish to complain about this parrot, what
I purchased not half an hour ago from this very boutique.” However, it’s safe to assume that a can of
Campbell’s chicken noodle soup is going to taste the same whether you buy it at Dollar
General or Kroger. So it is possible to make a solid week’s worth
of meals from groceries purchased at a dollar store and not find yourself constantly reaching
for the Pepto-Bismol. And there’s more good news on this front,
too: while some dollar stores are going to have a better food selection than others,
Dollar General did announce plans to expand its fresh produce availability to 450 of its
stores beginning in 2019. Dollar General and other dollar stores are
growing at a rapid rate and because of this, they can often snag really good bulk deals
from national brands. According to Fortune, brands like Coca-Cola
and Hershey didn’t always pay much attention to the dollar store segment of the grocery
business, but with the massive growth of small-box stores, national brands are now ready to play
ball. This means that they’ll offer dollar stores
those smaller-sized products and as well as higher-quality point-of-sale displays that
were once only for higher-end retailers. Because of their buying power, dollar stores
can convince brands like Campbell’s Soup to make a specially-sized can of tomato soup
that can be bought at a low bulk price, and other stores can’t compete. Check out one of our newest videos right here! Plus, even more Mashed videos about your favorite
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