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Saturday, April 3, 2010

Dollar Economics

I want to take some time to talk about Dollar Tree (not Dollar General, Family Dollar, but the ONE dollar "store" where you absolutely will not pay more than $1 for anything).  It was my first job, and while the info I was given at the time was not impressive (come on, I was 17, what do you expect?), it is now that you stop and think about it.

This deals with markups.
Their website answers the question of how they can continue to offer quality items for just $1.00.
"The answer is two-fold. First, our buyers work extremely hard to find the best bargains out there... period. Second, we have tremendous buying power at the dollar price-point. As the largest single-price-point company in the United States, we are constantly looking for great deals we can take advantage of. When we find a great value, we buy it... and we buy a TON of it! Then, we pass this savings on to you, our customers. We invite you to come check us out, compare our prices, and stretch your dollars by shopping with us."

Nothing that they buy do they pay more than $1 for.  (This was the rule 10 years ago, I'd assume it's probably stayed the same.  If it's not, you can still take the same lesson away from this.)  When I worked there 10 years ago, you might open a box of Suave shampoo with only 4 bottles in it, while you'd open a box of plastic toys manufactured by Dollar Tree that contained 120 toys.  That box of Suave shampoo is going to cost them $1, they're going to turn around and sell the bottles for $1 each, making a $3 profit.

Now let's look at, say, CVS.  They likely get a better deal than what Buy the Case advertises, $17.94 for 6 bottles (this looks like highway robbery to me!!!), but sell the same product for $2.19 each.  Now, they're either making a huge profit or don't have as smart of buyers at Dollar Tree.

Dollar Tree does not allow coupons, which is fine.  Most every other store does.  So when you're walking out of a store with Suave shampoo for pennies on the dollar, know that they are able to sell it to 1 store for .25 cents each, while still making some kind of profit for themselves.  Moral of the story: the company is making money, don't feel bad about getting a good deal!

Now having worked there for almost 2 years, I can tell you there are good deals, and there are not so good deals.  I've briefly shown this below.

Great deals:
1)  Greeting cards .50 cents each or packs of cards (thank-you, baby shower, etc) $1.
2)  Gift bags
3)  Body washes (usually)
4)  Minced garlic
5)  Books
6)  Vitamins
7)  Bread*
8)  Newspaper

* I recently had a co-worker tell me she never buys bread there because she figures it's stale or reject.  No, it's fresh, it's the same thing as in your grocery store.

Bad deals (as in you can usually get them cheaper with a coupon elsewhere):
1)  Canned vegetables
2)  Hand soap
3)  Toilet paper (unless you prefer 1-ply)
4)  Plastic toys (for safety reasons)
5)  Snacks
6)  Dish detergent

So, see, ultimately I can come up with more pros than cons.  Take a minute, look around.  You might be surprised with what you find!  I remember seeing full sized Tone body wash ($4+ each usually in other stores) and bags of Dove chocolates (those were gone within 24 hours of putting them out! :)).

Oh, and a rule of thumb, don't ask the cashier how much everything in your buggy is... they'll want to strangle you. :)

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