The Dollar Tree

1
The Dollar Tree

• Brad Dowdy
• Elizabeth Cha
• Ryan Lancaster

2
Mission Statement

• Dollar Tree Stores, Inc. is a customer-oriented,
  value driven variety store, operating at a one
  dollar price point. It will operate profitably,
  empower its associates to share in its
  opportunities, rewards and successes and deal
  with others in an honest and considerate way. The
  company's mission will be consistent with
  controlled and profitable growth.

3
Background Info.

• Established in 1953 and headquarters in
  Chesapeake, VA.
• Acquired numerous companies
• 4 similar companies from 1996-2000
• As of Dec. 31, 2005
• 75 on top 100 businesses
• Revenue 3.3 billion (8.6 from 2004)
• of stores 2,914
• Stock price 31.20 (DLTR/NYSE)

4
Who Why?

• Low-Medium income households
• Dollar Tree locations typically anchored next to
  mass merchandisers (ex Walmart Target)
• Convenience
• Variety of Merchandise
• 1 price ceiling

5
Product Category

• Division 1
• Party Goods, Stationery, Gifts, Crafts/Notions
• Division 2
• Fashion Accessories, Softlines, Floral,
  Valentine/Easter, Halloween, Thanksgiving/Fall
  Seasonal, Christmas, Baby, Books, Toys
• Division 3
• Candy, Food, Health/Beauty Care
• Division 4
• Household Consumables, Housewares, Pet Supplies,
  Electronics, and Hardware

6
Types of stores

• The Dollar Tree chooses three different store
  locations.
• Large strip center or mall
• Small strip center
• Stand alone store

                                                                                                                                                                                                                                                                                                                                      

     
7
What Do We Look For?

• Regional centers, anchored by "big box"
  discounters or dominant grocery stores.
• Freestanding locations in a strong retail
  corridor, with street presence and easy in/out
  and plenty of parking.
• Shopping centers that are highly visible and have
  strong traffic counts.
• Back door freight delivery, accessible by
  tractor-trailers

8
Store Layout

• Anchored by large discount or grocery store
  (25-33)
• Inside a mall (18)
• Freestanding or strip centers (about 50)

• Dollar Tree employs Grid Layout in the Corvallis
  location

9
Strengths

• Pricing of merchandise at 1.00
• Wide range of merchandise
• Potential industry growth and square footage
  growth.
• Corvallis
• Located within a small strip center (other
  retailers to draw customers in)
• Little direct competition

10
Weaknesses

• Customer Service
• Quality and quantity
• Poor product presentation
• Lack of cleanliness ?
• Corvallis
• Above!
• Location in relation to campus
• Strip mall retail selection (run down strip
  aesthetics)
• Poor signage

11
Opportunities for the Dollar Tree

• Relatively slow growth in U.S market, but stores
  that focus on discount merchandise will generally
  gain market share from independent more higher
  priced retailers.
• Larger stores are seeking tighter inventory
  control.
• Take advantage of manufacturers excess production
  capacity.
• Corvallis
• Students love anything cheap
• Not much direct competition
• Large and small strip centers available
• for retail space.
• Sponsorships ?

12
Threats

• Fixed price model limits power and gross margin
  enhancement.
• Margins pressured by merchandise cost, labor and
  shipping expenses and energy increases.
• Competition for super centers and other discount
  stores, including other dollar stores (ie
  Dollar Discount and Freds).
• Corvallis
• Kmart, Bi-Mart, Rite-Aid, Ross (volume and
  quality)

13
Sources

• http//www.stores.org/pdf/0620JULY201-10020Char
  t.pdf
• http//www.dollartree.com/
• http//mason.wm.edu/NR/rdonlyres/B269B202-3EBF-4F0
  5-8AFA-88AFA9520E9C/0/Dollar_Tree_REPORT.pdf