March 16, 2025 • 21 mins
Will and Mango have so many questions about the dollar store business: Why have so many more of these stores cropped up recently? How do you make a profit when everything in your store sells for under a buck? Is a $1 steak a good deal? Plus: the tea on why dollar store employees hate Hot Wheels so much!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Welcome to Part Time Genius, the production of iHeartRadio.
Speaker 2 (00:11):
Guess What Will? What's that Mango?
Speaker 1 (00:13):
So, if you're anything like me, you've probably noticed that
there are a lot of different dollar store chains out there,
Like pretty much everywhere you look, there's like a Dollar
Tree or a Dollar General or a Family Dollar. There's
a five below. I looked as up, there's a ninety
nine cents only. I mean, it's just dollar stores all
the way down.
Speaker 2 (00:31):
I feel, you know, I feel like maybe I haven't
cataloged them quite as extensively as you have. I had
forgotten this was one of your hobbies, but I will
acknowledge there are a lot of them.
Speaker 1 (00:41):
So I looked into it this week, and it turns
out that even though the stores seem the same, each
brand actually targets a completely different market.
Speaker 2 (00:48):
So what does that mean? Exactly?
Speaker 1 (00:50):
Dollar General a friendly target's older customers in more rural areas,
so they've intentionally built seventy five percent of their stores
in small towns with fewer than twenty thousand people. And
then on the opposite side, you've got things like five Below,
and it's target demographic as teens and young adults. So
you actually find those in suburban shopping malls.
Speaker 2 (01:08):
Actually, when you mentioned that the first time, I was
I didn't remember that, But now that you say that,
I can picture these being in shopping malls. So what
about Dollar Tree and what was that you said? Family Dollar? Like,
I know, I've seen both of those around. Who do
they target?
Speaker 1 (01:22):
So what's weird is they're actually owned by the same company.
Dollar Tree bought Family Dollar back in twenty fifteen for
I believe it's nine billion individual dollars.
Speaker 2 (01:31):
Well, yeah, and a.
Speaker 1 (01:33):
Huge reason for that, bio was because Dollar Tree caters
to middle income shoppers and Family Dollar goes after the
lower income ones, and the company wanted both markets.
Speaker 2 (01:42):
Yeah, it's funny, but I feel like we do sort
of treat these dollar chains interchangeably, like they're just kind
of there. You really would never guess that behind the
scenes they were playing this pretty intricate game with each other,
like carving up the market in the way that they are.
Speaker 1 (01:55):
Yeah, there's actually way more going on with dollar stores
than people might guess from you know, how they turn
to profit, whether one dollar steaks are really a good
deal after all? So why don't we dig in?
Speaker 2 (02:24):
Hey, their podcast listeners welcome to part time genius. I'm
Will Pearson and as always I'm joined by my good
friend mangesh Hot ticketter and on the other side of
that soundproof glass testing out his latest fine from the
dollar store. That's our friend and producer Loel Burlante. And
what a fine this was. I mean, hold the box
up again, Lull, I need to see it just a
(02:45):
little bit higher. So it's basically a Nettie pot, except
it's called a Yetti pot for some reason, and on
the front called it a little bit closer. The front
of the box shows a couple of what I presume
are meant to be Yetti's wearying a teapot up its nose.
It's kind of a weird, weirdge.
Speaker 1 (03:04):
At the time, but I would definitely pay two dollars
for that, you know, twice twice as much. So I
definitely want to talk about some of the other strange
stuff that turns off, you know, at dollar stores. But
why don't we start by getting a sense for just
how big a success story dollar stores really are so
they don't get a ton of respect. But in doing
the research, Gate basically pointed out that they're kind of
(03:26):
the unsung Kings of retail.
Speaker 2 (03:28):
Yeah. I don't know if this is true, but it
feels like there are more dollar stores now than there
were when we were growing up. It's definitely true.
Speaker 1 (03:35):
So dollar stores have been a fixture of American strip
mall since the nineteen fifties, but one of their biggest
booms came during the Great Recession of two thousand and seven,
and as the economy declined, dollar store sales went way
way up, and it resulted in this swell of like
new stores opening up all over the country. But the
really surprising part is that this popularity hasn't worn off
(03:56):
like dollar stores just keep on thriving. And in fact,
between two ten and twenty thirteen, the Family Dollar chain
opened fifteen hundred new stores, which is more than one
a day for four years in a row.
Speaker 2 (04:08):
Holy cow. And so I'm guessing insane. Yeah, I'm guessing
it wasn't just a family Dollar doing this too. Yeah.
Speaker 1 (04:14):
So the other chains like Dollar Tree and Dollar General
they were expanding too. Twenty thirteen ended up being this
banner year for dollar stores, and in July of that year,
so many new locations opened that it averaged out to
one new store opening every six hours.
Speaker 2 (04:29):
All month long. That's interesting. It does feel like too
many dollar stores, if we're being honest, So how many nights?
You disagree strongly? So how many are we up to now?
Speaker 1 (04:40):
So all told, there are more than thirty thousand dollar
stores in the US right now, and according to Forest,
that's more locations than the six biggest US retailers put together.
Speaker 2 (04:49):
So that's like.
Speaker 1 (04:50):
Walmart, Walgreens, CBS, Costco, Kroger, and Home Depot that's on
this list here. So you know, the wildest part is
that analysts say new dollar stores will keep popping up
like this for at least another three years before the
demand levels out.
Speaker 2 (05:04):
You know, I'm guessing a good deal of that success
is thanks to the strategy you were talking about at
the beginning of the show, like the way dollar store
brands tend to divvy up the market between themselves so
together they've got a lock on really like every person
who might potentially shop at a dollar store.
Speaker 1 (05:18):
That's right, And dollar stores really do have a much
more mixed income clientele than you might guess, But that
comes with some issues as well, Like one of the
big concerns with having a high number of dollar stores
is that the companies mostly target struggling communities when opening
new locations, and as a result, a single small town
or a city neighborhood can wind up with three or
four different dollar stores but no actual grocery stores, which
(05:42):
obviously is an ideal, since most dollar stores don't carry
fresh fruits or vegetables or meats.
Speaker 2 (05:46):
All right, so dollar stores can and do contribute to
the problem of what we call food deserts. But you're
saying that high earners shop at dollar stores too.
Speaker 1 (05:55):
Yeah, and in much larger volume than you might expect.
So according to this two thousand and six teen report
from Reuters, twenty nine percent of millennial households earning more
than one hundred thousand dollars per year say they shop
at least one of the big three dollar chains. So
all together, these choppers make up roughly, I guess, twenty
five percent of the total sales from those three chains.
Speaker 2 (06:15):
And it's pretty.
Speaker 1 (06:16):
Shocking when you think about it, but it also makes
sense since everyone you know likes a bargain.
Speaker 2 (06:21):
Yeah. Well, well, speaking of bargains, that was something I
wondered about this week, Like, our dollar store price is
actually a good deal, So of course we had to
look into this, and it turns out that no, they're
really not, or at least not always so. For example,
dollar stores tend to sell milk in sixteen ounce bottles
for one dollar each, which does sound like a steal,
(06:42):
but at that rate, you're actually paying eight dollars for
a full gallon.
Speaker 1 (06:46):
Which sounds like New York prices. Right, maybe don't shop
for milk at dollar stores. But what about like the
non perishable items, that kind of stuff like you wouldn't
really see the same kind of markup.
Speaker 2 (06:56):
On, right, Well, it depends. I mean, you can end
up with the same type of despair when you look
at something like raisins or aluminum foil. Like. The trick
in all of these cases is to offer familiar products
in slightly smaller packages, so most shoppers don't spot the
size differences or do an ounced ounce cost breakdown when
they're in the aisle. But that said, there are some
(07:17):
dollar store products that are generally solid deals, like toiletries
paper goods, for example, and you can buy a roll
of wrapping paper or a giant tub of cotton swabs
for half the price that you would at a big
buck store. So keep that in mind next time you're on.
Speaker 1 (07:31):
I love the idea of buying wrapping paper and just
you know, putting it around cotton swabs, So I feel same.
Speaker 2 (07:37):
That makes a lot of sense to me. Yeah, well,
there's another dollar store perk that I learned this week,
because even though shopping at the dollar store may not
always give you the most bang for your buck, it
is a good way to satisfy your shopping craving on
a budget. So if you're someone who enjoys going shopping,
then you're probably familiar with the small rush of pleasure
that comes from just making a purchase, and you can
(07:58):
actually thank your brain for that. So whenever we anticipate
a reward, which in this case would be buying something new,
our brains respond by triggering this kick of dopamine. So
for an average shopper, the more things you buy, the
more dopamine levels.
Speaker 1 (08:13):
Rise, which you know, I guess is why some people
become compulsive shoppers.
Speaker 2 (08:17):
Right, Yeah, that's exactly right. And so that's where dollar
stores come in because for most people, the pleasure we
get from shopping doesn't always scale with the amount of
money we're spending, so instead it's that number of items
that we might buy. So each one translates into its
own little kick of dopamine. How the next time you
feel the urge for a shopping spree, you might want
(08:38):
ahead to your local dollar store because you can fill
the basket on the cheap and still walk out feeling
like a million bucks. I'm sure that's exactly how it
would play out to all.
Speaker 1 (08:47):
Right, well, now that we've talked a little bit about
who's shopping at dollar stores, let's look at some of
the products that they're buying there.
Speaker 2 (08:53):
But first, a quick break.
Speaker 1 (09:01):
And.
Speaker 2 (09:08):
You're listening to part time Genius and we're talking about
the best and worst deals to be had at the
dollar store. Now, speaking of which, the time has come
at last, Mango, we need to talk about the one
dollar steaks.
Speaker 1 (09:20):
I love, like how offended you were by this, Like
we were talking about this beforehand. It just feels ridiculous.
And it's not like someone's actually going to force you
to eat one of these.
Speaker 2 (09:29):
It's the principle of the thing, Mango. But I feel
like we should back up a minute because some listeners
out there might be a wee bit confused by all
of this talk of a one dollar steak. So we
mentioned earlier that dollar stores don't usually carry fresh foods,
but a growing number of them do stock frozen foods
now And one of the best or worst deals is
the one dollar ribbi and the Dollar Tree freezer section.
(09:52):
So these four ounce boneless beef steaks are sold pre
season in a brine, and they're what's called the utili
the cut I guess, which are the parts of the
cow used in institutional kitchens. So the steaks Dollar Tree
sells are sourced from a company called Stampede Meat Ink.
I'm really jealous. I wish I had started a company
called Stampede Meat Ink.
Speaker 1 (10:12):
It's like the worst new It sounds like they sell
steaks made from cows. I got trampled by bigger cows.
Speaker 2 (10:18):
Well you never know, but if you're feeling adventurous, you
can buy one of these one dollar stakes for yourself
at any dollar Tree with a freezer section. And if
you read the reviews online, a lot of people compare
the meat to you know, say rubber, or maybe they
just say it doesn't cook that well. So I'm really curious.
Speaker 1 (10:36):
Now, so did you find anyone who actually liked these
one dollar sticks?
Speaker 2 (10:40):
I did find one positive review, but even then, the
woman who actually bought the steak. She didn't like it,
So why is that? Why is that a positive review? Well,
because her dog apparently did love it, So to be fair,
I did come across some surprisingly measured responses from actual humans. So,
for example, in twowenty sixteen, a TV station in Cincinnati
(11:02):
held a taste test for local firefighters. So they were
asked to sample a butcher's cut, a supermarket cut, and
of course the one dollar ribi. And the reactions were
mixed among the firefighters you might expect, but some of
the more positive views were it's not terrible and I
guess it was meat. I guess interview.
Speaker 1 (11:24):
Okay, so here's another product you probably didn't know you
could buy at the dollar store, or at least I
didn't know you could buy it, And that's a home
pregnancy test kit. But unlike those one dollar ribbis, these
pregnancy kits are actually worth the money. In fact, the
ones carried at a lot of I guess the dollar
tree stores are the same kind used in most hospitals.
Speaker 2 (11:43):
Oh wow, I mean, maybe this is a bit unfair,
but I'd be so hesitant to trust a one dollar
pregnancy test. I mean, that feels so cheap for that purpose, Like,
how could it actually be reliable?
Speaker 1 (11:54):
So I was wondering about this myself, and it turns
out the tests are actually pretty reliable. And that's because
most and tests are made to detect just one specific
hormone that's produced during pregnancy. It's like a simple enough
task that most kits can pull it off regardless of
the price. But you know, that's not to say there
aren't advantages to using a more expensive test. You know,
they can often detect lower amounts of that same hormone
(12:16):
earlier in the pregnancy, so you know, a Dollar Store
kit might not show that the woman is pregnant until
a little later in the pregnancy.
Speaker 2 (12:22):
I do love how the steak is super shady, but
like the pregnancy test, we feel like they're so trustworthy.
I guess it kind of balances each other out.
Speaker 1 (12:30):
Well. What's funny is that, like one of the other
items that Dollar Tree carries that's supposedly like this hidden
gem is their ovulation predictor. It actually has one of
the highest product rankings of all the Dollar Tree items.
I guess it's got four point six stars, and the
customer reviews say it works just as well as the
more expensive brands.
Speaker 2 (12:48):
I feel like we might just have to take their
word for that, But for now, I thought we could
switch gears and talk about something I've always wondered about,
which is how dollar stores actually make money.
Speaker 1 (12:57):
I feel like it's just through something a lot of
staate and pregnancy cuts.
Speaker 2 (13:01):
That's all there is. I mean, I guess that is true,
but I meant more like, how do dollar stores turn
a profit off of these, you know, really inexpensive products.
But before we get into that, let's take one more
quick break and welcome back to part time genius. All right, Mango,
(13:28):
So another thing I was curious about this week is
how dollar stores managed to turn profits off of you know,
these really inexpensive items. Because I found some sales figures
from a few years back, and I was shocked to
see that Dollar Tree makes thirty five cents of profit
for each dollar of revenue, compared to twenty four cents
per dollar that you know, a place like Walmart makes, which.
Speaker 1 (13:49):
Is surprising because you always hear about how well Walmart
negotiates down prices, you know, just because of all the
volume they sell.
Speaker 2 (13:55):
Right, So it made me wonder like, is it just
the high sales volume at a dollar store that helps
make up for the low prices or is there more
going on? And what I found is that while volume
does play a huge part, a lot of what makes
dollar stores profitable is that they have this no frills
approach to the shopping experience. For instance, at a big
box store like a Walmart, you're looking at nearly two
(14:17):
hundred thousand square feet of shopping space. They're just enormous.
But I meanwhile, the average Dollar general is just over
seven thousand square feet. I guess that's a smaller box.
It's a much smaller boxing. Maybe even if you're not
good at math, like that is a much smaller boxing.
Not only does the smaller footprint translate into lower leasing costs,
it also means that the dollar stores don't need to
(14:39):
hire as many workers. In fact, a typical dollar store
staff is made up of just eight or nine people,
while the average Walmart staff is closer to three hundred people.
So all of this together helps keep down the overhead
cost and that, along with the high volume of sales,
is why dollar stores are some of the most profitable
stores in the entire retail sector.
Speaker 1 (15:00):
You know, since we're talking about what sets dollar stores
apart from their larger cousins. I do want to highlight
what is probably my biggest beef with these, you know,
quote dollar stores, which is that, you know, somewhere along
the line, most dollar stores became dollar and up stores,
like even ninety nine cents only stores now sell products
for more than ninety nine cents. So now you can
walk into dollar stores and find items that cost two,
(15:21):
five and as much as ten dollars.
Speaker 2 (15:23):
Yeah, more like multi dollar stores, I guess, yeah, just
like regular stores, which feels like borderline false advertising, but
you know, it's become pretty accepted at this point. So
none of the big dollar chains still charge just a dollar.
Speaker 1 (15:37):
We actually looked into this, and it seems that I
guess the one dollar pricing has been Dollar Trees claim
to fame for their entire existence. For the thirty three
years it's been in business, the company has always stuck
to its original policy. And you know that that's despite
like inflation, despite growing competition, manufacturing costs, whatever, like, despite
all of that, Dollar Tree execs have kind of stood
(15:59):
by this one dollar policy for everything in their store.
Speaker 2 (16:03):
I'm guessing there's a butt coming to this.
Speaker 1 (16:05):
Yeah, So the company finally bowed to pressure from some
of its investors recently, and according to a company statement
made in March twenty nineteen, Dollar Tree has now begun
testing additional price points in some of its stores. And
you know, if the move boosts profits at the test stores,
like the investors hope it'll do, then chances are will
likely be seeing you know, dollar plus items in all
(16:26):
their store shelves before the year's out.
Speaker 2 (16:29):
Yeah, So in other words, stock up on those one
dollar ribis.
Speaker 1 (16:33):
Right, because you know, they could be three dollars ribis
or whatever in the.
Speaker 2 (16:36):
Next few years. I mean, it is kind of sad though,
like these may very well be the final days of
the last true dollar store if you think about it. Yeah,
it's the end of an era.
Speaker 1 (16:45):
But if you're looking for something that you can still
get on the Super Chief, we've got a boatload of
facts at very reasonable prices. So why don't we do
the fact off? Okay, so we started the show talking
about how dollar stores are pretty much everywhere these days,
(17:07):
and it feels like one is never more than a
few miles away at any given.
Speaker 2 (17:11):
Time, And it turns out that's actually true.
Speaker 1 (17:14):
So Dollar General has over fifteen thousand stores spread throughout
forty four states, and according to the company, that means
seventy five percent of the US population now lives within
just five miles of one of its stores.
Speaker 2 (17:25):
All right, well, here's a quick one. So when you're
in the big box stores, you really think of the
tricks that they use to get people to go for
the impulse buys or things like that, and actually dollar
stores use many of the same tricks. So, for example,
drug stores tend to put food and drinks up front
to act as these impulse buys, but the actual pharmacies
are tucked in the very back of the store, and
(17:47):
dollar stores act under the same principle. So food and
toys are stocked in the back of the store since
they tend to be the most popular items, and seasonal
impulse buys go right up front near the registers. So unfortunately,
one place where dollar stores do different from larger stores
is that they typically don't offer employee discounts, so unless
a product is damaged or open on the shelf, employees
(18:10):
have to pay the full dollar like everybody else.
Speaker 1 (18:13):
Well, paying full price is always a drag, but if
you ask some dollar store employees, they'll tell you that
the worst part of their job is having to deal
with the dreaded Hot Wheels toy collectors. And that's actually
not exclusive to dollar stores either, So over zealous hot
Wheels fans are actually kind of the bane of any
retail store that stocks them.
Speaker 2 (18:31):
Really, I don't get it. What's so bad about kids
who collect toy cars?
Speaker 1 (18:35):
So nothing at all. It's actually the adults who collect
toys that are the problem. And there's a big community
of adult Hot Wheels fans out there, and they're kind
of infamous for well, I mean, you can call it
their dedication. So Metal Flow has had a piece last
year where they spoke to a Dollar Tree manager named Nate,
and according to him, these so called hot Wheels hunters
will quote scour the Internet and find out when stores
(18:57):
are getting shipments, then show up and demand I go
to find the one box of hot Wheels out of
two thousand other boxes so that they can be the
first to buy them.
Speaker 2 (19:06):
I mean that does sound like a headache for the employees,
especially if these guys are showing up like every week
to do this.
Speaker 1 (19:11):
I mean, it's more of a nightmare than that they
ferently show up every day in a lot of cases,
and so the collectors who go to local stores every
morning when it opens are actually have a name, and
they go by the name door Warmers.
Speaker 2 (19:23):
All right. Well, still, that fact is a nice reminder
that dollar stores do indeed stock and brand name products
like hot wheels. But one thing you might not know
is that some dollar stores even have their own in
house or private label brands. And we usually think of
these with the big box stores. But the most successful
example is probably Dollar General's line of healthcare products, which
(19:45):
the company sells under the brand name rex Al. So
it's a strategy that's paid off for Dollar General too,
like the Rexall brand now accounts for more than two
hundred million dollars of the company's annual sales.
Speaker 1 (19:57):
Here's the weird one I found. So the founder of
Walmart and one of the founders of Dollar Tree both
got their start in business by running the same kind
of chain store. These were called Ben Franklin stores, and
some of the franchise stores are actually still around today.
You can think of them kind of as the prototype
to dollar stores. They had lots of different items like
a general store, but sold at discount prices, and these
(20:17):
dollar end up Ben Franklin stores turned out to be
a great way for both Sam Walton and k. R.
Perry to learn the ropes of retail, and after cutting
their teeth as franchise owners, both men soon went on
to establish successful chain stores of their own.
Speaker 2 (20:30):
So the guys behind the most successful big box chain
and the most successful dollar store chain both started in
the same place. That's pretty wild. Yeah, that is a
weird coincidence. So I think you deserve the trophy this week,
which I've subbed out for a one dollar ribi Mango,
just to bring it home nicely done.
Speaker 1 (20:49):
I don't know if that feels like a victory exactly,
having to take his own.
Speaker 2 (20:52):
No, it's a victory. Well, if you don't want it,
low ead it, I'm sure sure. All right, Well that's
going to do it for today's Part Time Genius for myself, Mango, Gabe,
and loll Thank thanks so much for listening. We'll be
back soon with another episode. Part Time Genius is a
(21:18):
production of iHeartRadio. For more podcasts from iHeartRadio, visit the
iHeartRadio app, Apple Podcasts, or wherever you listen to your
favorite show.
Welcome to Part Time Genius, the production of iHeartRadio.
Speaker 2 (00:11):
Guess What Will? What's that Mango?
Speaker 1 (00:13):
So, if you're anything like me, you've probably noticed that
there are a lot of different dollar store chains out there,
Like pretty much everywhere you look, there's like a Dollar
Tree or a Dollar General or a Family Dollar. There's
a five below. I looked as up, there's a ninety
nine cents only. I mean, it's just dollar stores all
the way down.
Speaker 2 (00:31):
I feel, you know, I feel like maybe I haven't
cataloged them quite as extensively as you have. I had
forgotten this was one of your hobbies, but I will
acknowledge there are a lot of them.
Speaker 1 (00:41):
So I looked into it this week, and it turns
out that even though the stores seem the same, each
brand actually targets a completely different market.
Speaker 2 (00:48):
So what does that mean? Exactly?
Speaker 1 (00:50):
Dollar General a friendly target's older customers in more rural areas,
so they've intentionally built seventy five percent of their stores
in small towns with fewer than twenty thousand people. And
then on the opposite side, you've got things like five Below,
and it's target demographic as teens and young adults. So
you actually find those in suburban shopping malls.
Speaker 2 (01:08):
Actually, when you mentioned that the first time, I was
I didn't remember that, But now that you say that,
I can picture these being in shopping malls. So what
about Dollar Tree and what was that you said? Family Dollar? Like,
I know, I've seen both of those around. Who do
they target?
Speaker 1 (01:22):
So what's weird is they're actually owned by the same company.
Dollar Tree bought Family Dollar back in twenty fifteen for
I believe it's nine billion individual dollars.
Speaker 2 (01:31):
Well, yeah, and a.
Speaker 1 (01:33):
Huge reason for that, bio was because Dollar Tree caters
to middle income shoppers and Family Dollar goes after the
lower income ones, and the company wanted both markets.
Speaker 2 (01:42):
Yeah, it's funny, but I feel like we do sort
of treat these dollar chains interchangeably, like they're just kind
of there. You really would never guess that behind the
scenes they were playing this pretty intricate game with each other,
like carving up the market in the way that they are.
Speaker 1 (01:55):
Yeah, there's actually way more going on with dollar stores
than people might guess from you know, how they turn
to profit, whether one dollar steaks are really a good
deal after all? So why don't we dig in?
Speaker 2 (02:24):
Hey, their podcast listeners welcome to part time genius. I'm
Will Pearson and as always I'm joined by my good
friend mangesh Hot ticketter and on the other side of
that soundproof glass testing out his latest fine from the
dollar store. That's our friend and producer Loel Burlante. And
what a fine this was. I mean, hold the box
up again, Lull, I need to see it just a
(02:45):
little bit higher. So it's basically a Nettie pot, except
it's called a Yetti pot for some reason, and on
the front called it a little bit closer. The front
of the box shows a couple of what I presume
are meant to be Yetti's wearying a teapot up its nose.
It's kind of a weird, weirdge.
Speaker 1 (03:04):
At the time, but I would definitely pay two dollars
for that, you know, twice twice as much. So I
definitely want to talk about some of the other strange
stuff that turns off, you know, at dollar stores. But
why don't we start by getting a sense for just
how big a success story dollar stores really are so
they don't get a ton of respect. But in doing
the research, Gate basically pointed out that they're kind of
(03:26):
the unsung Kings of retail.
Speaker 2 (03:28):
Yeah. I don't know if this is true, but it
feels like there are more dollar stores now than there
were when we were growing up. It's definitely true.
Speaker 1 (03:35):
So dollar stores have been a fixture of American strip
mall since the nineteen fifties, but one of their biggest
booms came during the Great Recession of two thousand and seven,
and as the economy declined, dollar store sales went way
way up, and it resulted in this swell of like
new stores opening up all over the country. But the
really surprising part is that this popularity hasn't worn off
(03:56):
like dollar stores just keep on thriving. And in fact,
between two ten and twenty thirteen, the Family Dollar chain
opened fifteen hundred new stores, which is more than one
a day for four years in a row.
Speaker 2 (04:08):
Holy cow. And so I'm guessing insane. Yeah, I'm guessing
it wasn't just a family Dollar doing this too. Yeah.
Speaker 1 (04:14):
So the other chains like Dollar Tree and Dollar General
they were expanding too. Twenty thirteen ended up being this
banner year for dollar stores, and in July of that year,
so many new locations opened that it averaged out to
one new store opening every six hours.
Speaker 2 (04:29):
All month long. That's interesting. It does feel like too
many dollar stores, if we're being honest, So how many nights?
You disagree strongly? So how many are we up to now?
Speaker 1 (04:40):
So all told, there are more than thirty thousand dollar
stores in the US right now, and according to Forest,
that's more locations than the six biggest US retailers put together.
Speaker 2 (04:49):
So that's like.
Speaker 1 (04:50):
Walmart, Walgreens, CBS, Costco, Kroger, and Home Depot that's on
this list here. So you know, the wildest part is
that analysts say new dollar stores will keep popping up
like this for at least another three years before the
demand levels out.
Speaker 2 (05:04):
You know, I'm guessing a good deal of that success
is thanks to the strategy you were talking about at
the beginning of the show, like the way dollar store
brands tend to divvy up the market between themselves so
together they've got a lock on really like every person
who might potentially shop at a dollar store.
Speaker 1 (05:18):
That's right, And dollar stores really do have a much
more mixed income clientele than you might guess, But that
comes with some issues as well, Like one of the
big concerns with having a high number of dollar stores
is that the companies mostly target struggling communities when opening
new locations, and as a result, a single small town
or a city neighborhood can wind up with three or
four different dollar stores but no actual grocery stores, which
(05:42):
obviously is an ideal, since most dollar stores don't carry
fresh fruits or vegetables or meats.
Speaker 2 (05:46):
All right, so dollar stores can and do contribute to
the problem of what we call food deserts. But you're
saying that high earners shop at dollar stores too.
Speaker 1 (05:55):
Yeah, and in much larger volume than you might expect.
So according to this two thousand and six teen report
from Reuters, twenty nine percent of millennial households earning more
than one hundred thousand dollars per year say they shop
at least one of the big three dollar chains. So
all together, these choppers make up roughly, I guess, twenty
five percent of the total sales from those three chains.
Speaker 2 (06:15):
And it's pretty.
Speaker 1 (06:16):
Shocking when you think about it, but it also makes
sense since everyone you know likes a bargain.
Speaker 2 (06:21):
Yeah. Well, well, speaking of bargains, that was something I
wondered about this week, Like, our dollar store price is
actually a good deal, So of course we had to
look into this, and it turns out that no, they're
really not, or at least not always so. For example,
dollar stores tend to sell milk in sixteen ounce bottles
for one dollar each, which does sound like a steal,
(06:42):
but at that rate, you're actually paying eight dollars for
a full gallon.
Speaker 1 (06:46):
Which sounds like New York prices. Right, maybe don't shop
for milk at dollar stores. But what about like the
non perishable items, that kind of stuff like you wouldn't
really see the same kind of markup.
Speaker 2 (06:56):
On, right, Well, it depends. I mean, you can end
up with the same type of despair when you look
at something like raisins or aluminum foil. Like. The trick
in all of these cases is to offer familiar products
in slightly smaller packages, so most shoppers don't spot the
size differences or do an ounced ounce cost breakdown when
they're in the aisle. But that said, there are some
(07:17):
dollar store products that are generally solid deals, like toiletries
paper goods, for example, and you can buy a roll
of wrapping paper or a giant tub of cotton swabs
for half the price that you would at a big
buck store. So keep that in mind next time you're on.
Speaker 1 (07:31):
I love the idea of buying wrapping paper and just
you know, putting it around cotton swabs, So I feel same.
Speaker 2 (07:37):
That makes a lot of sense to me. Yeah, well,
there's another dollar store perk that I learned this week,
because even though shopping at the dollar store may not
always give you the most bang for your buck, it
is a good way to satisfy your shopping craving on
a budget. So if you're someone who enjoys going shopping,
then you're probably familiar with the small rush of pleasure
that comes from just making a purchase, and you can
(07:58):
actually thank your brain for that. So whenever we anticipate
a reward, which in this case would be buying something new,
our brains respond by triggering this kick of dopamine. So
for an average shopper, the more things you buy, the
more dopamine levels.
Speaker 1 (08:13):
Rise, which you know, I guess is why some people
become compulsive shoppers.
Speaker 2 (08:17):
Right, Yeah, that's exactly right. And so that's where dollar
stores come in because for most people, the pleasure we
get from shopping doesn't always scale with the amount of
money we're spending, so instead it's that number of items
that we might buy. So each one translates into its
own little kick of dopamine. How the next time you
feel the urge for a shopping spree, you might want
(08:38):
ahead to your local dollar store because you can fill
the basket on the cheap and still walk out feeling
like a million bucks. I'm sure that's exactly how it
would play out to all.
Speaker 1 (08:47):
Right, well, now that we've talked a little bit about
who's shopping at dollar stores, let's look at some of
the products that they're buying there.
Speaker 2 (08:53):
But first, a quick break.
Speaker 1 (09:01):
And.
Speaker 2 (09:08):
You're listening to part time Genius and we're talking about
the best and worst deals to be had at the
dollar store. Now, speaking of which, the time has come
at last, Mango, we need to talk about the one
dollar steaks.
Speaker 1 (09:20):
I love, like how offended you were by this, Like
we were talking about this beforehand. It just feels ridiculous.
And it's not like someone's actually going to force you
to eat one of these.
Speaker 2 (09:29):
It's the principle of the thing, Mango. But I feel
like we should back up a minute because some listeners
out there might be a wee bit confused by all
of this talk of a one dollar steak. So we
mentioned earlier that dollar stores don't usually carry fresh foods,
but a growing number of them do stock frozen foods
now And one of the best or worst deals is
the one dollar ribbi and the Dollar Tree freezer section.
(09:52):
So these four ounce boneless beef steaks are sold pre
season in a brine, and they're what's called the utili
the cut I guess, which are the parts of the
cow used in institutional kitchens. So the steaks Dollar Tree
sells are sourced from a company called Stampede Meat Ink.
I'm really jealous. I wish I had started a company
called Stampede Meat Ink.
Speaker 1 (10:12):
It's like the worst new It sounds like they sell
steaks made from cows. I got trampled by bigger cows.
Speaker 2 (10:18):
Well you never know, but if you're feeling adventurous, you
can buy one of these one dollar stakes for yourself
at any dollar Tree with a freezer section. And if
you read the reviews online, a lot of people compare
the meat to you know, say rubber, or maybe they
just say it doesn't cook that well. So I'm really curious.
Speaker 1 (10:36):
Now, so did you find anyone who actually liked these
one dollar sticks?
Speaker 2 (10:40):
I did find one positive review, but even then, the
woman who actually bought the steak. She didn't like it,
So why is that? Why is that a positive review? Well,
because her dog apparently did love it, So to be fair,
I did come across some surprisingly measured responses from actual humans. So,
for example, in twowenty sixteen, a TV station in Cincinnati
(11:02):
held a taste test for local firefighters. So they were
asked to sample a butcher's cut, a supermarket cut, and
of course the one dollar ribi. And the reactions were
mixed among the firefighters you might expect, but some of
the more positive views were it's not terrible and I
guess it was meat. I guess interview.
Speaker 1 (11:24):
Okay, so here's another product you probably didn't know you
could buy at the dollar store, or at least I
didn't know you could buy it, And that's a home
pregnancy test kit. But unlike those one dollar ribbis, these
pregnancy kits are actually worth the money. In fact, the
ones carried at a lot of I guess the dollar
tree stores are the same kind used in most hospitals.
Speaker 2 (11:43):
Oh wow, I mean, maybe this is a bit unfair,
but I'd be so hesitant to trust a one dollar
pregnancy test. I mean, that feels so cheap for that purpose, Like,
how could it actually be reliable?
Speaker 1 (11:54):
So I was wondering about this myself, and it turns
out the tests are actually pretty reliable. And that's because
most and tests are made to detect just one specific
hormone that's produced during pregnancy. It's like a simple enough
task that most kits can pull it off regardless of
the price. But you know, that's not to say there
aren't advantages to using a more expensive test. You know,
they can often detect lower amounts of that same hormone
(12:16):
earlier in the pregnancy, so you know, a Dollar Store
kit might not show that the woman is pregnant until
a little later in the pregnancy.
Speaker 2 (12:22):
I do love how the steak is super shady, but
like the pregnancy test, we feel like they're so trustworthy.
I guess it kind of balances each other out.
Speaker 1 (12:30):
Well. What's funny is that, like one of the other
items that Dollar Tree carries that's supposedly like this hidden
gem is their ovulation predictor. It actually has one of
the highest product rankings of all the Dollar Tree items.
I guess it's got four point six stars, and the
customer reviews say it works just as well as the
more expensive brands.
Speaker 2 (12:48):
I feel like we might just have to take their
word for that, But for now, I thought we could
switch gears and talk about something I've always wondered about,
which is how dollar stores actually make money.
Speaker 1 (12:57):
I feel like it's just through something a lot of
staate and pregnancy cuts.
Speaker 2 (13:01):
That's all there is. I mean, I guess that is true,
but I meant more like, how do dollar stores turn
a profit off of these, you know, really inexpensive products.
But before we get into that, let's take one more
quick break and welcome back to part time genius. All right, Mango,
(13:28):
So another thing I was curious about this week is
how dollar stores managed to turn profits off of you know,
these really inexpensive items. Because I found some sales figures
from a few years back, and I was shocked to
see that Dollar Tree makes thirty five cents of profit
for each dollar of revenue, compared to twenty four cents
per dollar that you know, a place like Walmart makes, which.
Speaker 1 (13:49):
Is surprising because you always hear about how well Walmart
negotiates down prices, you know, just because of all the
volume they sell.
Speaker 2 (13:55):
Right, So it made me wonder like, is it just
the high sales volume at a dollar store that helps
make up for the low prices or is there more
going on? And what I found is that while volume
does play a huge part, a lot of what makes
dollar stores profitable is that they have this no frills
approach to the shopping experience. For instance, at a big
box store like a Walmart, you're looking at nearly two
(14:17):
hundred thousand square feet of shopping space. They're just enormous.
But I meanwhile, the average Dollar general is just over
seven thousand square feet. I guess that's a smaller box.
It's a much smaller boxing. Maybe even if you're not
good at math, like that is a much smaller boxing.
Not only does the smaller footprint translate into lower leasing costs,
it also means that the dollar stores don't need to
(14:39):
hire as many workers. In fact, a typical dollar store
staff is made up of just eight or nine people,
while the average Walmart staff is closer to three hundred people.
So all of this together helps keep down the overhead
cost and that, along with the high volume of sales,
is why dollar stores are some of the most profitable
stores in the entire retail sector.
Speaker 1 (15:00):
You know, since we're talking about what sets dollar stores
apart from their larger cousins. I do want to highlight
what is probably my biggest beef with these, you know,
quote dollar stores, which is that, you know, somewhere along
the line, most dollar stores became dollar and up stores,
like even ninety nine cents only stores now sell products
for more than ninety nine cents. So now you can
walk into dollar stores and find items that cost two,
(15:21):
five and as much as ten dollars.
Speaker 2 (15:23):
Yeah, more like multi dollar stores, I guess, yeah, just
like regular stores, which feels like borderline false advertising, but
you know, it's become pretty accepted at this point. So
none of the big dollar chains still charge just a dollar.
Speaker 1 (15:37):
We actually looked into this, and it seems that I
guess the one dollar pricing has been Dollar Trees claim
to fame for their entire existence. For the thirty three
years it's been in business, the company has always stuck
to its original policy. And you know that that's despite
like inflation, despite growing competition, manufacturing costs, whatever, like, despite
all of that, Dollar Tree execs have kind of stood
(15:59):
by this one dollar policy for everything in their store.
Speaker 2 (16:03):
I'm guessing there's a butt coming to this.
Speaker 1 (16:05):
Yeah, So the company finally bowed to pressure from some
of its investors recently, and according to a company statement
made in March twenty nineteen, Dollar Tree has now begun
testing additional price points in some of its stores. And
you know, if the move boosts profits at the test stores,
like the investors hope it'll do, then chances are will
likely be seeing you know, dollar plus items in all
(16:26):
their store shelves before the year's out.
Speaker 2 (16:29):
Yeah, So in other words, stock up on those one
dollar ribis.
Speaker 1 (16:33):
Right, because you know, they could be three dollars ribis
or whatever in the.
Speaker 2 (16:36):
Next few years. I mean, it is kind of sad though,
like these may very well be the final days of
the last true dollar store if you think about it. Yeah,
it's the end of an era.
Speaker 1 (16:45):
But if you're looking for something that you can still
get on the Super Chief, we've got a boatload of
facts at very reasonable prices. So why don't we do
the fact off? Okay, so we started the show talking
about how dollar stores are pretty much everywhere these days,
(17:07):
and it feels like one is never more than a
few miles away at any given.
Speaker 2 (17:11):
Time, And it turns out that's actually true.
Speaker 1 (17:14):
So Dollar General has over fifteen thousand stores spread throughout
forty four states, and according to the company, that means
seventy five percent of the US population now lives within
just five miles of one of its stores.
Speaker 2 (17:25):
All right, well, here's a quick one. So when you're
in the big box stores, you really think of the
tricks that they use to get people to go for
the impulse buys or things like that, and actually dollar
stores use many of the same tricks. So, for example,
drug stores tend to put food and drinks up front
to act as these impulse buys, but the actual pharmacies
are tucked in the very back of the store, and
(17:47):
dollar stores act under the same principle. So food and
toys are stocked in the back of the store since
they tend to be the most popular items, and seasonal
impulse buys go right up front near the registers. So unfortunately,
one place where dollar stores do different from larger stores
is that they typically don't offer employee discounts, so unless
a product is damaged or open on the shelf, employees
(18:10):
have to pay the full dollar like everybody else.
Speaker 1 (18:13):
Well, paying full price is always a drag, but if
you ask some dollar store employees, they'll tell you that
the worst part of their job is having to deal
with the dreaded Hot Wheels toy collectors. And that's actually
not exclusive to dollar stores either, So over zealous hot
Wheels fans are actually kind of the bane of any
retail store that stocks them.
Speaker 2 (18:31):
Really, I don't get it. What's so bad about kids
who collect toy cars?
Speaker 1 (18:35):
So nothing at all. It's actually the adults who collect
toys that are the problem. And there's a big community
of adult Hot Wheels fans out there, and they're kind
of infamous for well, I mean, you can call it
their dedication. So Metal Flow has had a piece last
year where they spoke to a Dollar Tree manager named Nate,
and according to him, these so called hot Wheels hunters
will quote scour the Internet and find out when stores
(18:57):
are getting shipments, then show up and demand I go
to find the one box of hot Wheels out of
two thousand other boxes so that they can be the
first to buy them.
Speaker 2 (19:06):
I mean that does sound like a headache for the employees,
especially if these guys are showing up like every week
to do this.
Speaker 1 (19:11):
I mean, it's more of a nightmare than that they
ferently show up every day in a lot of cases,
and so the collectors who go to local stores every
morning when it opens are actually have a name, and
they go by the name door Warmers.
Speaker 2 (19:23):
All right. Well, still, that fact is a nice reminder
that dollar stores do indeed stock and brand name products
like hot wheels. But one thing you might not know
is that some dollar stores even have their own in
house or private label brands. And we usually think of
these with the big box stores. But the most successful
example is probably Dollar General's line of healthcare products, which
(19:45):
the company sells under the brand name rex Al. So
it's a strategy that's paid off for Dollar General too,
like the Rexall brand now accounts for more than two
hundred million dollars of the company's annual sales.
Speaker 1 (19:57):
Here's the weird one I found. So the founder of
Walmart and one of the founders of Dollar Tree both
got their start in business by running the same kind
of chain store. These were called Ben Franklin stores, and
some of the franchise stores are actually still around today.
You can think of them kind of as the prototype
to dollar stores. They had lots of different items like
a general store, but sold at discount prices, and these
(20:17):
dollar end up Ben Franklin stores turned out to be
a great way for both Sam Walton and k. R.
Perry to learn the ropes of retail, and after cutting
their teeth as franchise owners, both men soon went on
to establish successful chain stores of their own.
Speaker 2 (20:30):
So the guys behind the most successful big box chain
and the most successful dollar store chain both started in
the same place. That's pretty wild. Yeah, that is a
weird coincidence. So I think you deserve the trophy this week,
which I've subbed out for a one dollar ribi Mango,
just to bring it home nicely done.
Speaker 1 (20:49):
I don't know if that feels like a victory exactly,
having to take his own.
Speaker 2 (20:52):
No, it's a victory. Well, if you don't want it,
low ead it, I'm sure sure. All right, Well that's
going to do it for today's Part Time Genius for myself, Mango, Gabe,
and loll Thank thanks so much for listening. We'll be
back soon with another episode. Part Time Genius is a
(21:18):
production of iHeartRadio. For more podcasts from iHeartRadio, visit the
iHeartRadio app, Apple Podcasts, or wherever you listen to your
favorite show.
Part-Time Genius News
Hosts And Creators
Will Pearson
Mangesh Hattikudur
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