Long before the incredible recession-era successes ofdollar chains Walmart consistently revealed a strong case of dollar storeenvy. Target did as well but to asignificantly lesser degree.
Even as Walmart grew its traditional big box footprintsto supercenter size, in order to advance to its current dominant status in thegrocery world, the company found itself mimicked by its much smaller prototypeddollar store competition. Whiletransitioning traditional Walmart stores to supercenters required considerably morereal estate which resulted in even more costly conversions, dollar chains simplyaltered aisle space and allocations to accommodate additional groceries whilegradually investing in freezers and refrigerators, requiring little to noadditional real estate.
As with Walmart, dollar stores saw the addition ofperishables as well as expanded grocery sections as a means of attractingregular customers to visit stores more frequently while luring additionalshoppers to the thrift-based general merchandising concept. As the recession hit, the thriftconcept became even more popular and for many consumers a necessity.
While Walmart’s everyday low price reputation stood thecompany in good stead, especially during the early months of the recession,dollar stores eagerly pursued a clever and aggressive growth strategy. Maintaining the integrity of their traditional compact retailfootprints, dollar chains eagerly expanded into typical neighborhood sites,often located in communities among the most economically challenged by therecession. This strategy tookadvantage of declining bargain-based real estate prices and gave the dollar retailersa firm loyalty within these newly targeted communities.
As the recession wore on, Walmart experienced tepid totroubling financials domestically. Dollar chains, even to this most recent quarter, continued to grow atspeeds that would be admirable in the best of economies. And here comes Walmart’s envyagain.
In addition to maintaining compact and efficientfootprints, dollar stores have increased their community credibility throughdominance via neighborhood expansion. As the price of fuel rose greatly through the past two decades, Walmartovertly admired the growth of dollar store neighborhood locations and theirattraction to consumers as a quick trip, both in terms of time needed tocommute as well as a relatively short in-store trek to fully cover thediversity of goods dollar stores have to offer.
Walmart has never been able to steer clear of itsadmiration for the many competitive aspects of the dollar store economicmodel. Last year the world’slargest retailer introduced a concept that many thought to be Walmart’s answerto the dollar store. The rapidrollout of nearly a dozen Walmart Express locations was seen as a call to mimicthe incredibly rapid expansion of top dollar store chains. At 15,000 sq. feet the typical WalmartExpress was clearly far bigger than typical dollar store competition. That footprint could be comparativelyprohibitive to entry in many costly urban real estate settings.
Early this year however Walmart quietly halted additionalExpress openings. Recently theExpress location in Chicago was shuttered as its one-year lease expired. While Walmart had initially claimedthis Express location would serve to supplement sales at its nearby big box, manyfelt the Express location served more to cannibalize from its nearby bigbrother. At best the Expressconcept was always essentially a work in progress as early on Walmart boldlylooked to customers for merchandising suggestions. Signs throughout the storesfeatured comments such as ‘If you want it, we'll get it’.
Despite the apparent back burner position of the futureof the Express format, Walmart continues to pine for dollar store-likeattributes and success. Thecompany’s latest move to emulate a dollar store paradigm is a project called Dollar $tation. Actual Dollar $tations have been referred to as dollar stores in abox.
A recent article referred to Dollar $tations as Walmart’sattempt to take on Dollar Tree. Dollar $tations are essentially dark green scored heavy cardboard bins,placed strategically on pallets to offer a variety of unrelated ‘impulse’ items. These offerings can change from day today and don’t represent any particular theme other than products being offeredfor a dollar. Bins are currentlylocated at the discretion of local store management.
During a series of recent store visits I noticed that inone store the Dollar $tation was located near consumer electronics, in anotherthe Dollar $tation was situated in an impromptu aisle at the front of asupercenter. Nearby were severalother similar looking bins of varied colors, offering themed items designed tosell at bargain prices. Oneoffered clearance items at 50% off. Another offered mostly HBC type items, each for eighty eight cents. Another offered a neat assortment ofkitchen utensils for $1.88 each. Most of these utensils are similarly available at a nearby Dollar Treefor $1 as part of a far greater kitchen dollar selection.
Dollar $tation bins are overstuffed with a disparatevariety of items, many meant for children. Batman and Spiderman products were among those designed tointroduce children to drawing and painting. Puzzles and thin puzzle books abounded for both children andadults. There were a few plasticsimple toys featured alongside adult oddities such as a six-pack of “Las Vegas’style dice. In many cases thenearby bargain bins were easier to navigate and offered better prices orvalues.
This project is reminiscent of Target’s dollar bin initiativewhich began several years ago as a set-in place dollar section strategicallysituated near the front entrance. Metal pronged ‘dollar’ bins offered contents pegged to sell for adollar. These bins were initiallyhighly publicized.
Based on their longevity, they were able to attract afair share of visitors entering Target locations. Due to their location, they were almost impossible to missand early on I noticed them as much due to the number shoppers curiouslyinvestigating their contents for dollar bargains. This crowd of dollar bargain hunters has shrunk with time aseither the novelty wore off or the products were not sufficiently inspiringshoppers.
After a while the bins began to include items at slightlyhigher price points and eventually lost their distinction as an actual dollarvenue. Currently this section istitled, “$1 Happy Bargains $1’ with most bins offering contents for one dollarwhile several offer varying contents for $2.50. Offerings feature seasonal hopefuls which now revolve aroundHalloween. Staples include anumber of snack foods including candy and chips. During a recent visit many bins were empty which means thateither sales are extremely brisk or the concept is largely overlooked thoughlocated in a prime traffic area.
Dollar Tree and its dollar retailing competitors continueto heavily invest in new locations while fine tuning product selection with aneye toward increasing customer visits with a comprehensive variety of groceriesand its usual ‘treasure hunt’ of new bargain items, all for one dollar. Meanwhile Walmart enviously quiets itExpress initiative and rolls out cardboard bins to randomly offer impulse itemswhich seem to lack much of a pulse.
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