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Whether you stop by your local Target or nearby Walmart in the near future, things might look different. Both retailers …
01 Monday May 2023
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Whether you stop by your local Target or nearby Walmart in the near future, things might look different. Both retailers …
27 Thursday Apr 2023
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We’re about to say something that many actors in the book retailing sector would have been shocked to hear, not …
18 Tuesday Oct 2022
There aren’t a lot of grocery bargains to be had these days—unless you’re shopping at Dollar General. While competitor Dollar Tree has raised the price of many of its goods to $1.25, Dollar General is committed to keeping lots of items at just one buck, and even expanding its $1 offerings, while also expanding its grocery offerings. This decision and dedication reflect Dollar General’s recognition that its consistently low price offerings are counted on by “core customers” whose incomes are less than $40,000 per year, and who run out of cash in the last week of most months.
These customers are visiting stores more often, though they make fewer purchases during each visit, likely signaling their budgetary constraints. The stores are also attracting new, newly budget-conscious customers who are seeking less expensive groceries, as inflation is otherwise driving food prices up, and up, and up.
Currently, about 20 percent of Dollar General’s merchandise is selling for $1. The retail chain is working toward offering even more products at this price. It also is bolstering the fresh, refrigerated, and frozen foods that make up its DG Fresh initiative. The company is now self-distributing refrigerated and frozen foods across its 18,000-plus stores, and it plans to have fresh produce in 3,000 stores by year’s end, in an effort to compete with traditional supermarkets instead of convenience stores. In support of this initiative, Dollar General plans to install more than 65,000 refrigerator cooler doors this year.
It’s good for customers’ bottom line, and Dollar General’s, too. A second quarter report showed that sales had increased 9 percent to $9.4 billion, and same-store sales rose 4.6 percent. An updated full-year sales prediction indicates that full-year sales will increase about 11 percent, up from the previous estimate of 10 percent.
Discussion Questions:
Source: Matthew Stern, “Dollar General Plans to Expand Its Selection of $1 Items,” RetailWire, September 16, 2022; Heather Lalley, “Dollar General’s $1 Groceries Are Here to Stay,” CSP, September 14, 2022; Nathaniel Meyersohn, “Why Dollar Tree’s Price Hike to $1.25 Could Be ‘One of the Worst Decisions in Retail History’,” CNN, December 8, 2021; Nathaniel Meyersohn, “Rising Prices Are Pushing Shoppers to Dollar Stores,” CNN, June 8, 2022; Jon Springer, “Dollar General Plans to Self-Distribute Fresh, Frozen Foods,” CSP, March 18, 2019; Sam Silverstein, “Dollar General Bulks up on Perishables in Q4 as Overall Comps Wilt,” Grocery Dive, March 18, 2022; Marianne Wilson, “Dollar General Posts Strong Q2, Upbeat Guidance,” Progressive Grocer, August 26, 2022
07 Wednesday Sep 2022
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Way back when, all the way back in the 1990s, Abercrombie & Fitch was the source for some very strange …
25 Thursday Aug 2022
The pandemic changed a lot of the ways that people do things, and some of those new habits have stuck. For example, when merely breathing in the same room as another person spelled dire peril, consumers understandably stopped shopping as much in brick-and-mortar stores. Online shopping grew to fill the void, and then some, with e-commerce sales increasing from $571.2 billion in 2019 to $815.4 billion in 2020, then to $870.78 billion in 2021.
It is not just consumers whose behavior changed though. Retailers and manufacturers had to adapt to this new world of consumption, as well—bolstering their e-commerce offerings and in some cases ditching third-party retailers to sell directly to customers themselves. In so doing, they have entered into more direct competition with sellers that have been direct-to-consumer—DTC—from the start, like the glasses company Warby Parker or AllBirds, which sells comfy, sustainable shoes. But these innovative upstarts now confront competition from companies with greater brand recognition, as they enter the DTC business. For example, Nike cut back substantially in the amounts of physical product it provided for Foot Locker, Amazon, DSW, Zappos, and other third-party retailers to sell. Instead, it moved the inventory to bolster its DTC offerings, in a move the company claims helped offset the decline in its wholesale business early in the pandemic.
According to Nike’s Chief Financial Officer, some 24 percent of Nike’s total revenue in the fiscal year that ended in May 2022 came through digital channels, including its website and smartphone app. As this calculation indicates, DTC is not limited to the web. Accordingly, Nike has plans to build out its DTC offerings even further, including a Jordan-only concept store to open in 2023, as well as more Nike Live stores, which are membership-based boutiques that offer unique merchandise and special experiences.
Along with Nike, food and beverage companies like Pepsi have entered the DTC market in recent years. Across these markets, the lines between the manufacturer, retailer, and distributor categories have grown more fuzzy.
But even as these big-name brands jump on the DTC train, it might be jumping the track. Some very recent figures suggest a big slow-down in online shopping. Warby Parker is the latest DTC brand to enter into downsizing mode, laying off 15 percent of its corporate workforce. Other DTC brands like Allbirds and Glossier, as well as Walmart’s DTC arm, have shrunk recently too. The reasons for this contraction might be the heightened competition in the market, or it could reflect the increased costs of Facebook ads and shipping costs. Alternatively, maybe the projections were wrong, and the customer bases for DTC products remain relatively small. In response, some companies have reoriented themselves yet again, away from selling directly to consumers and toward a stronger embrace of the wholesale route. Everything old is new again.
Discussion Questions:
Source: Akiko Matsuda, “Direct-to-Consumer Sales Are Fueling Supply-Chain Tech Growth,” The Wall Street Journal, August 6, 2022; Tim Gaus and Bill Lam, “Consumer Connectivity: Creating Customer-Centric Supply Chains,” www2.deloitte.com, August 2, 2022; Sara Bloomberg, “Shogun, a Direct-to-Consumer E-commerce Startup, Lays off Dozens,” The Business Journals, August 10, 2022; Gary Drenik, “Will Retailers Follow Nike’s Playbook? Why More Brands Are Moving to DTC Operations and Away from Wholesale and Marketplaces,” Forbes, July 12, 2022; Mayumi Brewster, “Annual Retail Trade Survey Shows Impact of Online Shopping on Retail Sales during COVID-19 Pandemic,” census.gov, April 27, 2022; Nicole Silberstein, “Nike to Double Down on DTC Following Q3 Gains, Plans Standalone Jordan Stores,” Retail TouchPoints, March 23, 2022; Jessica Young, “US Ecommerce Grows 14.2% in 2021,” Digital Commerce 360, February 18, 2022; Cara Salpini, “How Nike Is Using DTC and Data to Expand Its Empire,” Retail Dive, March 23, 2021; Alex Kantrowitz, “The Direct-to-Consumer Craze Is Slamming into Reality,” CNBC, March 14, 2022; Daphne Howland, “Warby Parker Lays off 15% of its Corporate Workforce, Citing Changing Consumer Behavior,” Retail Dive, August 9, 2022; Caroline Jansen, “DTC Brands Have Long Been Vocal about the Importance of Sustainability. Is That Enough?” Retail Dive, June 27, 2022
20 Wednesday Jul 2022
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Some analysts predict 2022 is going to be a rough year for Best Buy. The Motley Fool sees a “growth …
18 Monday Jul 2022
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As it gets harder and more expensive to attract new customers online, some online brands are taking a bold step …
23 Thursday Jun 2022
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Mary Gundel was a celebrated Dollar General manager, at a store near Tampa. She’d received a letter from headquarters telling …
01 Wednesday Jun 2022
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Forty years ago, about one in five employed Americans belonged to a union. That number declined by about half—to 10.3 …
26 Thursday May 2022
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Over the most recent ten quarters, Bed Bath & Beyond has failed to achieve its predicted revenue levels in seven …