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A Small-Town Image Belies a Retail Chain's Success

by on March 29, 2016 12:00 AM

Having spent the early part of my career in retail I invariably find myself critiquing stores whenever I am out in the world acting as a consumer. 

I can still recite many of the old-line retail maxims: Retail is detail; if there’s time to lean, there’s time to clean; there are two rules to retail - 1) the customer is always right and 2) when the customer is wrong re-read rule No. 1; the top three needs for any store are, location, location and location; and on and on…

Customer service being the watchword of the retail industry I usually -- when not shopping for commodities -- lean toward those businesses that make me feel good about being there.

In Happy Valley my desire for quality customer service means I mostly spend my hard-earned money at a “local” retailer -- either one that’s locally-owned and operated or a locally-owned franchise of a larger chain. Luckily this area has something in just about every retail category to cover my needs.

However, at least twice a year I venture over Seven Mountains to Milroy, only a few miles from the quaint town of Naginey, for a service not available here in State College.

As I drive to my appointed location I pass a Dollar General store that always makes me smile. One of the ways I know I’ve left the confines of our metropolitan area is the presence of a hitching post in a Dollar General parking lot. Nothing says “country” quite as effectively as, “here’s a place to park your horse.” With a de rigueur pile of you-know-what about eight feet in front of the post.

Which brings me to something I recently discovered that surprised me. It’s something I, the retail gadfly, wasn’t aware of and which reminded me of that age-old saying: you can’t judge a book by its cover.

My discovery occurred when I opened my internet browser and a headline popped up claiming, “Retailer Winning Sales Battle Against Online Merchants.” The retail topic caught my attention, and even though I expected the usual banal, regurgitated fluff piece from a stock press release, I clicked on it anyway.

The article quickly laid out the expected premise that many traditional brick-and-mortar retailers are fighting sales declines as online shopping grows. It then went on to name one retail giant that is doing quite well against this online onslaught. One that is not only doing well but growing.

Imagine my surprise when the article claimed this retailer is Dollar General.

Then I read on. And I was fascinated.

For years I have associated the presence of a Dollar General store with the presence of open space, and a general lack of population. I can’t recall the last time I shopped in one because there isn’t one near me. There is one in Bellefonte, but even Ferguson Township (population 17,000) apparently has too many people for their target demographic.

Based on their locations, signage and exteriors I had always assumed (you know what happens when you assume) it was a small franchise that catered to rural areas unserved by big-box, or even mid-size-box, retailers. The words “retail giant” never, ever, ever, ever, ever entered my mind as being descriptive of Dollar General.

Wow. Was I wrong.

Turns out Dollar General has 12,483 stores in the United States. Twelve thousand! There are more than 500 in Pennsylvania. And by the time you read this there will be more.

It had sales of $20.4 billion in 2015. Their CEO received over $9 million in compensation in 2014 – including 80 hours of personal use of the company’s aircraft (Dollar General has a company airplane!). Their Board of Directors is the equivalent of any major corporation. Directors include the CEO of Cracker Barrel, the CEO of AutoZone, the former president of ABC and the former CFO of CVS. All of whom received over $200,000 in compensation just for being directors. And their stock pays a dividend.

Well that certainly doesn’t fit the country image I have in my mind personifying Dollar General. Who knew? Seems I was not only incorrect about Dollar General but I was off by the proverbial broad side of a barn.

This is a retail giant that started out in 1955 as a single store in Springfield, Ky., with the concept that no item would cost more than $1. It went public in 1968 and has been growing ever since.

Which sounds oddly similar to another story I recall from my retailing days gone by. There was a five-and-dime store that opened in 1950 in Bentonville, Ark., which grew into full-service discount store. It went public in 1970 and it too has been growing ever since. Its name, of course, is Walmart. 

In another few weeks I’ll again be making that twice-yearly trip over to Milroy. Except this time when I pass the Dollar General with the hitching post outside I’ll remember that underneath that small-town exterior is a multi-billion dollar citified corporation. Like they say, the more you know…

John Hook is the president of The Hook Group, a local management consulting firm, and active in several nonprofit organizations. Previously John spent 25 years in executive, management and marketing positions with regional and national firms. John lives in Ferguson Township with his wife Jackie and their two children.
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