Private label helps dollar stores keep making billions
Deep-discount dollar stores bring in a lot of green with Chesapeake, Va.-based Dollar Tree making $22 billion in revenue alone in 2018. But how do these retailers make such a profit off of selling everything for one dollar?
According to Business Insider, dollar stores are designed to get customers to spend more money, from keeping product sizes small to stocking up on private label goods. Dollar stores also tend to be a smaller in size. A typical Dollar Tree, for example, is just 8,000 to 12,000 square feet. That's roughly one-eighteenth the size of the average Walmart. This makes for an effortless shopping experience where consumers can quickly go through the entire store, and easily find additional products they might be interested in.
Other ways dollar stores get consumers to spend more money at their stores include:
- Inventory setup, where seasonal products are placed in the front and the most popular items are placed in the back, so customers have to walk through the entire store to get to them.
- Bringing in more private label items helps retailers control manufacturer costs, keeping prices low but still profitable.
- Stocking shelves with smaller products keeps prices low but also means needing to replace them more often, which means more visits and even more spending.
To read the Business Insider article, click here.