Cal Turner
Dollar General Case Study Analysis
Background
J.L. Turner and son Cal Turner founded Dollar General in 1939 as a wholesale dry goods retailer. They quickly changed their business to retail and opened their first dollar store in Kentucky, 1955. The company went public 14 years later and eventually Cal took over as president in 1977 and then became chairman in 1989. With the foundation of the company starting from a father and son, it is no wonder why Dollar General has a strong family culture. This is emphasized with their company mission: “To serve others: to provide customers a better life, shareholders a chance for a superior return, and employees respect and opportunity” (Harvard Business Review 2009). Company superiors treat the employees …show more content…
Dollar General store customers typically live within 5 miles of the store yet half of its stores operate in communities with populations of 20,000 or less. Their stores are located mainly in the southeast, southwest, and Midwest of the U.S. Only 2% of the stores are in urban areas with low-income people where the real estate rent was usually lower as well. With lower rents and the company policy being low cost with a pattern of buying short-term leases for their stores, urban areas might be a way to grow into areas with much higher …show more content…
As noted by Beryl Buley, (division president of merchandising, marketing, and supply chain) the average shoppers at their stores are in and out in 10-20 minutes while a similar shopper would spend about 55 minutes in a competing Wal-Mart (HBR, 2007). The company in the store is focused on the top turning stock-keeping units in each SKU category whether it is household cleaners, seasonal decorations, or paper products. Dollar General from its foundation has always focused on having a high turnover rate. With this philosophy in mind, the backrooms of the store have been known to become over loaded with inventory leading to an inefficient use of inventory. This hurts turnover rates. Their pack-away strategy, which had been recently dismantled, would require store managers to pack away items not sold to be sold the following year. One manager from the case study said “I spent two hours trying to stock a carton of soccer balls and a carton of water toys.” This has clearly been a problem and the company has improved the situation somewhat by appointing district managers who help individual store managers with setbacks such as these. Much of the problem is the fact that non-core merchandise creates an unnecessary amount of inventory that the managers do not know what to do with. While attractive because the margins are twice that of highly consumable
Background
J.L. Turner and son Cal Turner founded Dollar General in 1939 as a wholesale dry goods retailer. They quickly changed their business to retail and opened their first dollar store in Kentucky, 1955. The company went public 14 years later and eventually Cal took over as president in 1977 and then became chairman in 1989. With the foundation of the company starting from a father and son, it is no wonder why Dollar General has a strong family culture. This is emphasized with their company mission: “To serve others: to provide customers a better life, shareholders a chance for a superior return, and employees respect and opportunity” (Harvard Business Review 2009). Company superiors treat the employees …show more content…
Dollar General store customers typically live within 5 miles of the store yet half of its stores operate in communities with populations of 20,000 or less. Their stores are located mainly in the southeast, southwest, and Midwest of the U.S. Only 2% of the stores are in urban areas with low-income people where the real estate rent was usually lower as well. With lower rents and the company policy being low cost with a pattern of buying short-term leases for their stores, urban areas might be a way to grow into areas with much higher …show more content…
As noted by Beryl Buley, (division president of merchandising, marketing, and supply chain) the average shoppers at their stores are in and out in 10-20 minutes while a similar shopper would spend about 55 minutes in a competing Wal-Mart (HBR, 2007). The company in the store is focused on the top turning stock-keeping units in each SKU category whether it is household cleaners, seasonal decorations, or paper products. Dollar General from its foundation has always focused on having a high turnover rate. With this philosophy in mind, the backrooms of the store have been known to become over loaded with inventory leading to an inefficient use of inventory. This hurts turnover rates. Their pack-away strategy, which had been recently dismantled, would require store managers to pack away items not sold to be sold the following year. One manager from the case study said “I spent two hours trying to stock a carton of soccer balls and a carton of water toys.” This has clearly been a problem and the company has improved the situation somewhat by appointing district managers who help individual store managers with setbacks such as these. Much of the problem is the fact that non-core merchandise creates an unnecessary amount of inventory that the managers do not know what to do with. While attractive because the margins are twice that of highly consumable