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An Endless Treasure Trove
by Beverly Dykes
Who could pass up an opportunity for convenient, fun shopping that also offers the promise of scoring great values? That, in a nutshell, characterizes the Dollar Tree retailing concept -- the nation’s leading operator of discount variety stores selling everything for $1 or less. Every Dollar Tree store is stocked with a broad, exciting merchandise mix that includes many trusted regional and national brands. The product assortment encompasses so many pertinent categories, it is almost impossible for shoppers not to find something they can use every day, or are in need of for an upcoming event, occasion or holiday.
Dollar Tree, Inc. traces its roots back to a variety store opened in Norfolk, VA by K.R. Perry in 1953. Operated successfully through the 1950s and ‘60s, the retail operation would undergo a name change and subsequent evolution into a multi-state chain of toy stores (dba K&K Toys) that were founded in 1970 by K.R. Perry’s son, Doug Perry, and Macon Brock. In 1986, the first store operating under the Dollar Tree name was opened in Dalton, GA, and proved so successful that by the close of that year the company had five such units in operation. In 1991 corporate executives Doug Perry, Macon Brock, and Ray Compton opted to focus exclusively on the growth of the dollar store concept and sold off the K&K Toys chain to KB Toys, a division of Melville Corp. In 1993, the company changed its name to Dollar Tree Stores, Inc. (precursor to today’s Dollar Tree Inc.), which became publicly traded beginning in 1995 (NASDAQ:DLTR).
A series of strategic acquisitions followed, as the company intensified its focus on expanding its nationwide presence in the marketplace. Among significant acquisitions were Dollar Bill, Inc.’s stores in 1996, 98-Cent Clearance Centers and Only $One Stores in 1999, Dollar Express in 2000, Greenbacks, Inc. in 2003, Deal$ Stores (from SuperValue) in 2006, and Vancouver, British Columbia-based Dollar Giant Stores in 2011. The latter acquisition added 86 units operated throughout British Columbia, Ontario, Alberta and Saskatchewan, Canada to the chain’s roster, with these being the first retail locations to be operated outside the U.S. by Dollar Tree.
Other highlights of the company’s history that have marked its evolution over the years include the promotion of Bob Sasser to Pres./CEO in 2004 (having served as President/COO since being promoted in 2001); the opening of the chain’s 300th store in 2006; crossing the $4 billion sales threshold in 2007; being named to the Fortune 500 in 2009, and having had the number one performing stock in the entire Fortune 500 for 2008-2009; and celebrating the opening of the chain’s 4000th store in 2010. Today, its thousands of shopping center and mall stores operating in all 48 contiguous states and Canada are supported by nine distribution centers. The company does not offer franchising opportunities, but operates all of its stores from corporate headquarters based in Chesapeake, VA.
As described by company President and CEO Bob Sasser, “Dollar Tree is focused on providing a broad, balanced assortment of merchandise that customers need and want, at surprising values. Our stores are clean, bright, convenient, seasonally relevant and fun to shop.” The principal enticement for the stores’ devoted clientele is the “thrill of the hunt.” With its combination of quality everyday general merchandise offerings and constantly changing selection of seasonal products, there is always an opportunity to find useful, unusual, and coveted “gems” among the shelves. The stores major departments encompass Floral Supplies & Décor; Party Supplies; Office Supplies, Arts & Crafts; Toys Games & Activities; Health & Personal Care; Cleaning, Storage & Hardware; Kitchen & Tableware; Emergency & Disaster Relief Supplies; and a multitude of items geared toward outfitting teaching and office environments. The corporate aim is to provide a clean, organized environment where customers can make new discoveries every week, and can frequently be heard exclaiming “I can’t believe it’s only $1.00.” In addition, the company’s online offerings include larger quantity purchases of most items sold in the stores, down loadable craft and project sheets, tips on recent manufacturer buyouts, as well as small business, school and wedding event support pages. As the economic doldrums have persisted, shoppers and organizations have been increasingly challenged to find ways to stretch their budgets. Dollar Tree stores have thus gained a significant following, owing to their relevance and extreme value pricing.
During the fourth quarter of 2011, Dollar Tree opened 21 stores, expanded or relocated 3 units and closed 5. For fiscal year 2011, the company reported a 12.7% increase in net sales compared with 2010. Comparable store sales saw an increase of 6%. Sales estimates for the first quarter of 2012 were anticipated to be in the range of $1.65 to $1.69 billion (with a projection of $7.25 to $7.42 billion in sales projected for the full year). As North America’s leading operator of single-price-point dollar stores, Dollar Tree executives recognize that the location of its stores is vital to its success. Thus, they engage the assistance of local real estate experts in securing the best possible locations for new units.
The concept typically utilizes spaces ranging in size from 8,000 to 12,000 sq. ft., with the average store size being 11,500 gross sq. ft., with at least 70 ft. of frontage. The preference is to locate stores where middle-America lives and shops: regional and neighborhood centers anchored by big box discounters or dominant grocery stores. Freestanding locations in a strong retail corridor with street presence, easy ingress/egress and ample parking are also ideally suitable. In terms of demographics, there should be a minimum population of 20,000 residing within a 5 mile trade radius, reporting an average household income of $25,000 to $60,000. The shopping center under consideration must be characterized as highly visible and bordered by streets having strong traffic counts. The space must accommodate back door freight delivery, accessible by tractor trailers.
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