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Dollar General Analysis

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Analysis of the Dollar General store (Retailing concepts)
12
Group B » Alfredo | Alejandra | Francisco | Gianpaolo | Henry | Johanna | Manuel Dollar General
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Page 1: Dollar General  Analysis

Group B » Alfredo | Alejandra | Francisco | Gianpaolo | Henry | Johanna | Manuel

Dollar General

Page 2: Dollar General  Analysis

Agenda

I. DG’s value proposition & positioning

II. Strategy

III. Tactics

- Growth vectors: assessment- Where & how to grow- Marketing Mix: comparison- Feasibility analysis

- What about DGM’s target?- Specific actions for each component of the marketing mix: 4P’s

TacticsStrategyIntro

Page 3: Dollar General  Analysis

Value proposition & positioning

What does DG sell?

essential

“Basic everyday and household needs, supplemented with a variety of

general merchandise items, at every day low prices in conveniently

located, small-box stores“

TacticsStrategyIntro

Page 4: Dollar General  Analysis

Value proposition & positioning

To whom?

essential

Basic and proximity purchases (extreme-value retailer)

- Convenient locations

- Time-saving shopping experience

- Everyday low prices on quality merchandise.

- Served primarily low, middle, and fixed income families

- 86% of their customers are women

- U.S.: southern, southwestern, mid-western, and eastern states

How does DG accomplish its objective?

TacticsStrategyIntro

Page 5: Dollar General  Analysis

Growth vectors: assessment

Demography

Geography

Product

+

-

-

Fierce competition with

Wal-Mart or Target.

- Lack of relationship with local

suppliers (economies of scale);

- Customer’s purchasing behavior may

differ significantly from their existing

customer base.

- Increase the presence of the

brand in the market that has

shown loyalty to DG;

- Knowledge about your

customers in the area;

- Existing of strong distribution

corridors;

TacticsStrategyIntro

Page 6: Dollar General  Analysis

MARKET

OLD NEW

OLD Mkt. Penetration Market Development

NEW ProductDevelopment Diversification

PR

OD

UC

T

Where and how to grow?

Tool: Ansoff matrix

TacticsStrategyIntro

Market share

% of consumers in area of influence

% of expenditure within the category

Annual expenditure

when compared to total mkt. avg

Frequency

Avg. expenditure= x x x

Page 7: Dollar General  Analysis

Assortment Price

Convenience

Location

Dollar General Dollar General Market

Wal-Mart

Marketing Mix: comparison

Wal-Mart Neighborhood Market

Assortment Price

Convenience

Location

TacticsStrategyIntro

Page 8: Dollar General  Analysis

Feasibility analysis

Assumptions

Results & Analysis

- No DG Markets opened in 2006 (53 out of 8200 stores)

- Target growth potential through new store opening of 9,8% (2007)

- Same-store sales growth remains constant (2,2%)

- New stores to be opened in 2.007 was set in 4% (2006)

- Sales per year per DG Market growth linearly with the variation in surface

- Estimated opening stores to achieve sales target growth: 201 DG Market

- Expansion capability (maximum ever seen in 2005): 279 DG Market

- Estimated new SKUs 16,800

- Minimum required population 25,100 people

TacticsStrategyIntro

Page 9: Dollar General  Analysis

Strategy

How to achieve it: tactics

What about Dollar General Markets’ target?

TacticsIntro

Product

- Assortment:

a) Increase number of SKUs (approx. 16,800)

b) Strong focus on high-consumables or groceries

c) Increase in the percentage of private labels as part of their assortment

- Workforce:

a) Training (groceries & perishable products)

b) Additional 4 store clerks will be needed for the DG Markets

Page 10: Dollar General  Analysis

How to achieve it: tactics

Promotion

Strategy TacticsIntro

- Strong effort to communicate to their customer base that DG Market

stands for the same principles and values as DG stores.

Place

- Avoid cannibalization -> target slightly bigger communities (25,100)

- Areas where low-potential stores were closed -> new format, new opportunities

- Other factors (leasing, truck access, friendly parking lot)

Price

- Extend DG s policy of keeping “simple” their tag prices

- Maintain their offering of “everyday low-prices”

Page 11: Dollar General  Analysis

Alfredo | Alejandra | Francisco | Gianpaolo | Henry | Johanna | Manuel

Thank you for your time…

Group B did a masterpiece today… well done!

Roberto Manzano A.

валхи славян азбукин (алфавичĕн)

тепĕр тĕсĕ. Хальхи вырăс çырулăхăн

алфапвитне кириллица çине таянса

тунă. Вырăс алфавичĕнчи

саспаллисене чăваш çырулăхне кĕртнĕ.

Алфавит ятне славянсен IX ĕмĕрти

паллă просветителĕ Константин

(Кирилл) философ ячĕпе каланă.

Page 12: Dollar General  Analysis

Annex. Feasibility Analysis

0,00%

5,00%

10,00%

15,00%

Sales due to growth

Stores 8229.00

Stotal sales 9169822.00

Avg sales per store 1114.33

Openings

2003 6700

2004 7320

2005 7929

2006 8229

2007 (forecast) 8558

Surface Var. in surface Avg. Sales

DG surface 6900 1114.3

DG MARKET surface 17000 246% 2745.5

Actual expansion Annual increase

capacity (max) 41201000

2002 45354000 4153000

2003 50015000 4661000

2004 54753000 4738000


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