Analysis Of Porter's Five Forces Model For Dollar General

Better Essays
Some of the driving forces of change in the discount/variety store industry are gaining new customers and retaining frequent customers. Dollar General accomplishes this by offering low prices and convenient locations and easy to shop store formats. Frequent customers are retained because they save money. Another driving force of change is the digital revolution. Dollar General offers customers DG Digital Coupon program to more than 11,300 stores across 40 states (Dollar General News Center, 2014).
Porters Five Force Model for Dollar General Corporation.
1. Competition from rival sellers – high
Everyday low prices from small box retailer
Industry growth – Rapid expansion of stores in communities.
Low switching cost due to easily liquidated
…show more content…
More chain stores are dominating the retail industry landscape. Therefore, potential new entrants are an issue due to the advantage they have with centralized buying and vertical structure(Investopedia Staff, n.d.). Suppliers have very little power in this industry (Investopedia Staff, n.d.). Buyers, customers demand high quality products at bargain prices. Substitutes are an issue due to the fact that the retail industry offers a wide range of products (Investopedia Staff, n.d.). The Bargaining power of the customer is high, if the products are not differentiated then the customer can switch to another retailer. When the products are similar the customer will compare prices, which increases competition which will increase competition and will lead to lower prices and profits (Investopedia Staff, …show more content…
This helps the company achieve sustained competitive advantage by keeping fixed costs low and providing a no frills shopping environment. Dollar General, made changes to 49 planograms to provide more affordable items across 90 percent of its departments. One example is its opening price point Smart & Simple private brand (Anderson, 2014).
Dollar General is pursuing the low cost provider strategy. Their strategic objective to provide essential consumables at low cost through convenient locations is designed to be successful. With their small-box format and modest “no frills” buildings designed to keep costs low. With economical store format gives advantages of low initial investment, low manpower requirements and proximity to customers enables them to keep costs low, and able to expand locations (Marketline, n.d.).
During harsh economic times consumers are going to the lower cost stores. Dollar General Stores are more convenient and are a “no frills” basic store and they are in the neighborhood. Their stores usually only have 2 to 3 employees. This keeps fixed costs lower than other retail

Related Documents

  • Decent Essays

    These formed the basis of competition among the mogul firms with each firm working extremely hard to win customers to its side. Some firms would produce high quality products at relatively cheaper prices compared to the rest of the firms in a bid to lured clients (Thompson, 2012) .Despite the fact that the cost may be higher at an alternate retailer, the scope of items is more noteworthy and builds the likely accessibility of adequate substitutes. The demographic client base of the wholesale discount retail market is agreeable with and grasps the fortune chase shopping…

    • 865 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    Porter’s Five Forces Model helps business people understand the relative attractiveness of a company and the company’s competitive pressures. The Porter’s Five Forces including buyer power, supplier power, threat of substitute products or services, threat of new entrants and rivalry among existing competitors. The buyer power of Tesco Malaysia is quite high. This is because when items have small differentiations and more standardized, it will lower the switching cost and causes client to change products unpredicted and can easily be switched from one brand to another. With the current technology and availability of online retail shopping, customer will compare the products easily and will always attracted and buy the lower price items.…

    • 795 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    Costco Case Analysis

    • 728 Words
    • 3 Pages

    Moreover, consumers are shopping at Costco and saving a lot of money which is making other business contemplate on adopting some of the methods that Costco is using because Costco is a new breed of business that puts employees and customers first and lets everything else fall into place. So the next time you decide to shop somewhere decide if you feel that it 's right that employees need to suffer in order for…

    • 728 Words
    • 3 Pages
    Decent Essays
  • Decent Essays

    The eight ratios analyzed were all good or above average in its industry. The current ratio was good, however not the best in the industry. The primary reason why it has more current liabilities than it does current assets is because the capital used to buy wholesale products and sell retail are used heavily to keep the business booming. Many customers are constantly shopping in Wal-Mart, and this need has to be met with enough inventories. The quick ratio which measures short term obligations, suggests that Wal-Mart is capable to pay its creditors and has above average number than the industry.…

    • 1883 Words
    • 8 Pages
    Decent Essays
  • Decent Essays

    We do our part, you do yours. Together we save money". IKEA Objectives: • To produce cheap and affordable product for the public/customers. • Better life for those who can't afford expensive products. • Ensure the customer finds what they are looking for in store.…

    • 1995 Words
    • 8 Pages
    Decent Essays
  • Decent Essays

    • Amazon uses Low-cost leadership strategy by providing lower price than other online retailer. • Amazon also uses supplier intimacy strategy and strengthen customer, to attract new customers and keep existing customer happy. • Its shipping price is less than Walmart which is around…

    • 927 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    Those who are in the small scale industry will also benefit the locals set up business easily as it does not really require the owner to be skilled and there is low overhead cost and minimum use of imported goods. It will also benefit the local when…

    • 2117 Words
    • 9 Pages
    Decent Essays
  • Decent Essays

    The satisfaction of the consumers makes them spread a good word of mouth which is a form of marketing. The company has financial resources that allow it to advertise its products through the media and various sources which convince more consumers to purchase from the company. These strengths are similar to Lowe’s company’s strengths. The company is the second largest retailer in the US market which increases this competitive position and advantage over the rest of the retailers. The size of the company allows it to avoid paying the high prices that are set by the wholesalers since it purchases stocks from the manufacturers and consequently reducing its operation cost and reducing the prices from the consumers and an increase in the profitability of the organization.…

    • 1452 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    While “free” is undoubtedly the single most effective draw in sales, “cash back” isn’t far behind. You can use the same marketing strategy to increase your average order value with cash-back offers, setting a spending threshold slightly above your current average order amount with a cash-back reward to be used on the customers next visit. This not only creates an immediate AOV increase but also encourages return visits, potentially turning one-time shoppers into loyal customers. Once you’ve determined your threshold, make your offer bold and clearly visible on your webpage. Display your free shipping banner front and center on your website homepage and on every page a customer clicks.…

    • 1054 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    ADVANTAGES AND DISADVANTAGES OF E-COMMERCE ADVANTAGES #1: Low Financial Cost One of the benefits of ecommerce is that has a lower startup cost. Physical retail stores have to pay up to thousands to rent one of their store locations. Also, they have several upfront costs such as store sign, designing their store, buying inventory, sales equipment, and more. #2: 24/7 Potential Income One of the advantages of ecommerce is that online stores are always open for business. With your ads, you can attract someone at 11 p.m. or 4 a.m..…

    • 774 Words
    • 4 Pages
    Decent Essays