Every year, dollar stores see higher and higher
earnings, but how can a store that seems like it's giving things away turn itself into a
multi-billion-dollar enterprise? The answer is simple: that dollar isn't always
the great deal it appears to be. Here are their secrets. Whether times are good or bad, you can still
count on people to flock to dollar stores because they have the one thing everyone loves:
convenience. Sales for Dollar General are always on the
upswing, with the chain seeing an increase of 3.7 percent between 2017 and 2018, regardless
of the state of the economy. Take it from Dollar General CEO Todd Vasos,
who had this to say about their regular customers: "We have seen no sign of trade out or trade
up from our core customers. Even in a good economy, [they are] still looking
for value and convenience." So, basically, no matter how much money people
have, they still want something that bigger grocery stores can't give them. Dollar stores are not just convenient because
their items are cheaper, but also because there seems to be one on every corner — and
that makes them perfect for a quick fill-in trip between your weekly grocery runs. These stores are also typically smaller than
the ones in a big chain like Walmart, which means that you can usually get in and out
with your emergency bag of dog food, a handful of snacks, or supplies for your kid's art
project in just a couple of minutes. The fact that most people are on to this,
means dollar stores are always making money — even if customers buy just a few things. "Your gloves! Tomato seeds! Fertilizer! Hey, Pat Sajak, I’ll solve the puzzle! GARDENING!” It's common knowledge that the success of
a business is largely based on its location. If you aren't in a place where you can offer
something that the local community needs, you aren't going to have much of a customer
base. This is why Dollar Tree and Dollar General
are mostly located in areas where people with a lower income level reside, and where big
box stores aren't easily accessible. According to CNN Business, 75 percent of Dollar
General stores are located in towns that have less than 20,000 people. The chain targets sparsely populated rural
areas where it can be the only game in town when it comes to buying food or other supplies. In most cases, the closest grocery store is
more than 15 or 20 miles away, making the dollar store a much more convenient option. Dollar General also strives to put locations
in areas that are known as "food deserts." These areas — which aren't just limited
to rural towns, but may also include underserved urban areas — are places in which fresh
food is not readily available. To take advantage of this, dollar stores offer
snacks and are even working to expand their food sections, giving people even more reason
to shop there. More customers means more dollars, and those
dollars soon add up to big bucks. It is no secret that a store that sells most
items for $1 was made in the interest of appealing to customers who don't have a ton of money. These shoppers don't just want a better deal
than they can find at other stores, they need one. Dollar stores capitalize on this need by opening
stores in lower-income areas and presenting themselves as a cheaper and more convenient
option. If you don't have to drive half an hour to
get to a full-size grocery store, you don't spend as much money on gas, which helps to
save a lot of money in the long run. The savings only continue when you arrive
at the store and find thousands of items apparently offered at a much lower price point than competitors. “It's going to be a savings stampede!” “SAVINGS. STAMPEDE!” Before you start filling up your cart with
all kinds of $1 items, there's something you should know. That dollar is not always as good a value
as it seems. Stores like Dollar Tree and Dollar General
count on the customer being distracted by the appearance of a discount and not taking
the time to check the difference between the sizes and the quality of the items at their
stores. Because of this, unsuspecting customers end
up actually paying more for an item than they would have somewhere else, and it usually
doesn't last nearly as long. In reality, it is grocery stores that offer
the highest discounts, although they see lower earnings overall. For every dollar spent by a customer at Dollar
Tree, the company makes a profit of 35 cents. Walmart, for example, makes only 24 cents
per dollar. This is because the items at dollar stores
cost less to manufacture, and the company isn't losing any money by keeping them priced
at just a dollar. The number one best trick carried out by dollar
stores is that they are actually giving you less for your money. You might think you found a great deal by
buying a box of aluminum foil for $1, but check the length of the roll. Let's just take that as a single example — one
of several compiled by HowStuffWorks.com. That $1 box of foil you buy at Dollar Tree
is 15 feet long, but if you spend more at Walmart and get a larger box, it works out
to over 18 feet per $1. The same applies to products throughout the
store. As if this weren't bad enough, you should
know that according to Macon Brock, one of the founders of Dollar Tree, dollar store
owners are basically counting on people to not think so they don't notice what's going
on behind the curtain. He wrote in his book: "When a customer walked into our store she
could shut off her brain. She didn't have to think, didn't have to calculate
how much she was spending. All she had to do was count – 'One, two,
three, four, five, six. I have six items and I have six dollars. I can buy this.'" At a dollar store, you get what you pay for. While a dollar might be a deal for some items,
you can't expect something long-lasting and high-quality if you can pay for it with loose
change. Whether it's Dollar General, Dollar Tree,
or any other chain of dollar stores, one of the biggest ways that the business saves money
is by selling items that are made of cheap, flimsy materials. And sometimes, that's downright dangerous. According to the Washington Post, children's
toys are one of the worst things you can buy at a dollar store. Many are made with tiny pieces that come off
and can be choked on, and they fall apart surprisingly quickly because they are made
of parts that cost next to nothing to put together. Electronics and things like power strips are
a bad idea too. After one use (or 20), they could malfunction
and ruin your devices because they weren't made with the proper materials and safety
standards. Most people don't expect their dollar store
purchases to last forever, and when one thing breaks, they just go back and get a replacement
for another dollar, which means more money in the dollar store's pocket. Instead of buying a higher-quality item at
another store for $5 once, they end up buying the same, cheaply made item ten times at the
dollar store and spending twice as much without noticing, which is all part of the company's
plan. If you've ever been inside a dollar store,
you will have noticed that it's much smaller and more compact than a typical grocery store. This is no accident. According to Business Insider, a Dollar Tree
store is usually small, with an average size of just 8,000 to 12,000 square feet. They say that's about one-eighteenth of the
size of the average Walmart — so it's not just a small difference. The stores are designed this way so that you
can easily go through the entire store in just a matter of minutes, making it more likely
that you can find something you need or want without much searching. There is also a method to the way the aisles
are arranged that affects what shoppers buy. Typically, seasonal items like Christmas decorations,
party favors, or summery cups and pinwheels meet you as soon as you walk in the door,
tempting you with the stores' newest inventory right off the bat. The products that shoppers buy most frequently,
such as food or children's toys, are placed in the back, meaning that you have to walk
through the entire store — and past all the other tempting deals — to get to them. This set-up has been proven to sell more products
because people leave with a lot more than what they came in to get. “Oh… when did you get this?” “One minute ago…” The average small, independent grocery store
employs around 14 people, but the average Dollar Tree and Dollar General only employs
eight. Dollar stores are typically smaller and don't
see the huge rush that other retailers do, so they can afford to get by with only a handful
of workers per shift. As a result, they don't have as many employees
to pay and provide insurance and benefits for, so they don't see as much money going
out as other stores do. The downside to this is that most dollar stores
are located in areas in which people are struggling economically. While the arrival of a new Walmart or Target
in town could mean many more jobs for the locals, a new Dollar Tree really doesn't. So while the chain itself is saving money
and raking in more and more of it, this money isn't being spread out into the community,
which is one of the major complaints about this type of establishment. Business Insider called private labels a dollar
store's, quote, "secret weapon." Most big box stores offer private label products
too, but this practice is especially lucrative for stores like Dollar General and Dollar
Tree. A private label is usually one owned by the
store, and they typically cost less to manufacture, and therefore appear on the shelves with a
price that is less than half of what name brands charge for the same item. At one point in time, this strategy didn't
work, as people were loyal to specific brands because they knew they would get the quality
they were looking for. As the economy shifted, though, and the quality
of even brand name products changed, people began to grow more open to private label brands. Now, thanks in part to millennials making
up a large portion of the shopping public, people are less focused on which brand is
best and are more focused on things like price and environmental impact, meaning that private
labels, generics, and unknown brands have quickly become the most appealing options. When people are buying their store brands,
dollar stores are raking in a lot more profit. Above all, the main way that dollar stores
make money is that they offer a way for low-income people to get the everyday items they need
for an affordable price. For this reason, the large majority of dollar
stores are located in areas that see a lot of "economic distress." Unfortunately, dollar stores don't really
help to fight economic distress — they cause more of it. According to Fast Company, dollar stores deliberately
target the country's more economically vulnerable communities. Once they set up shop, they wipe out all competition
in the form of grocery stores and independent small businesses, making them the only choice
when it comes to food and other necessities. While the dollar store itself makes millions
off these communities, the people in them are left with no healthy food options and
no locally owned businesses, resulting in even less income for the already-stressed
economic environment. Dollar stores become the only game in town,
and make money because they offer something people think they can't get anywhere else. Because of this, they are taking much more
than people's dollars. Check out one of our newest videos right here! Plus, even more Mashed videos about shopping
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