Case | HBS Case Collection | May 2007 (Revised April 2009)

Dollar General (A)

by Willy C. Shih, Stephen P. Kaufman and Rebecca McKillican

Abstract

Dollar General Corporation (DG) operates one of the leading chains of extreme value retailers in the United States. 2006 revenues reached $9.2 billion, making DG the 6th largest mass retailer in the country. With revenues growing at 9% annually over the five-year period up to 2005, DG had the distinction of being only one of three retailers to outperform Wal-Mart in both revenue and profit growth in that time. Life in a Dollar General store paints a vivid picture of the roots and historical focus of the company. Opportunistic buying has given the stores an eclectic merchandise mix. Analysts often referred to this category as "treasure hunt" SKUs. Offers an opportunity to examine a company's business model, particularly since DG has been so successful competing with Wal-Mart where so many other retailers have not. While it started out as a family business in the five-and-dime tradition, it evolved to a close-out retail model where its unique low-overhead operations were advantageous. As it added highly consumable categories its mix shifted, but it managed to retain its low-overhead model. Interestingly, the mix shift was likely more an emergency strategy driven by store-level operations than by top-down driven strategy. Frames the growth options available to DG's CEO as he grapples with how to maintain growth.

Keywords: Business Model; Family Business; Disruptive Innovation; Growth and Development Strategy; Competitive Advantage; Retail Industry; United States;

Citation:

Shih, Willy C., Stephen P. Kaufman, and Rebecca McKillican. "Dollar General (A)." Harvard Business School Case 607-140, May 2007. (Revised April 2009.)