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We are considering opening a franchise dollar store, but not sure which one would be the best pick. We see Liberty Dollar, Dollar General, Dollar Tree, Dollar Store and Family Dollar.
A friend of mine said we should not buy a franchise dollar store. He recommended we order suppies and products from a dollar store merchandise supplier, get a business license and rent a place on our own.
We've never owned a business, but are willing to learn. Is it that easy to open a dollar store? We were thinking the franchise would kinda guide us through the rough patches until we were stable.
Anybody own a dollar store or know about this business?
Dollar General, IIRC, was purchased by KKR. KKR has a habit of taking a successful operation, ripping it apart and make a profit while trashing it. Skip that one. Let it die in peace.
Family Dollar - eh, not impressed with them.
Dollar Tree - of the bunch, these seem to have the cleaner stores and a decent line of product, along with a better staff.
The high volume low profit per item model has inherent issues. A really good independent 99 cent store in Florida went belly up even with lots of people buying cartloads of stuff.
If I was going into the market, I would combine it with a produce or farmer's market operation. The standard supermarkets are pricing fresh vegetables and fruits out of reach and making a killing while doing so. There is a lot of potential going for second tier and blemished items if you can get turnover high enough to limit spoilage.
Dollar Tree - of the bunch, these seem to have the cleaner stores
My local Dollar Tree and Family Dollar stores both have issues with NUMEROUS carts of "staged" restocking merchandise blocking the isles . . can't understand how the fire department lets them operate like that. The floors of the Family Dollar are always littered with trash . . Dollar Tree is generally much cleaner.
Thanks. Sounds like I will be requesting information on Dollar Tree.
Harry Chickpea, the produce/farmers market idea sounds good. However, I am not sure if any dollar store would allow me to sell products other than theirs? But it couldn't hurt to ask. I think some dollar stores offer food products like chips and cookies though.
In Ohio, we had a dollar store called something like 99 cents or some similar nonsense. It is on Howe Avenue in Akron, OH in a series of plaza's that cater to a wide variety of classes. In the same plaza is a Best Buy, Borders, Home Depot, Staples, Petsmart, Panera, etc. Anyway, it's clean and doesn't just carry 99 cent items, but also has groceries - frozen foods, drinks, milk, canned goods, etc. I found that most of the things they carried seemed slightly more interesting than in stores like the Dollar Tree, etc.
Maybe check to see exactly what the name of that store is (sorry, I moved across the country last year) and see if they have any anywhere near you and see how they're doing. It might be something similar to what Henry Chickpea mentioned. Good luck.
My local Dollar Tree and Family Dollar stores both have issues with NUMEROUS carts of "staged" restocking merchandise blocking the isles . . can't understand how the fire department lets them operate like that. The floors of the Family Dollar are always littered with trash . . Dollar Tree is generally much cleaner.
I would think this is a management issue and not the store. There are alot of messy successfull dept. stores like Walmart, but are that way cause of lazy management.
Local management does play a part in the day to day upkeep, but the overall look, when a number of stores are involved, are much more a function of the corporate and district management. Local managers just don't have control of the purse-strings to replace illuminated signs, shelving, flooring, or even painting. At most, they MAY have some control over the cleaning company and stockers.
Messiness is also something that is either tolerated or not tolerated on a supervisory level. I've supervised theatres that had previously been pig sties for years, read the riot act, pointed out the requirements for continued employment and had them cleaned-up by the same management and employee team within a month at the longest.
To me, it is obvious that Dollar Tree has the superior operations department. That doesn't indicate their corporate viability though, since the buyers, logistics, real estate department, and debt service all have impact. If ALL those ducks are in a row, then the potential for growth is there. The other dollar stores that are messy have at least one lame duck in the row.
I have a colleague who got soaked with a dollar store business. They lost lots of money. The advice they gave me based on what they learned is:
1. Negotiate the rent. Make sure you get a cheap rent and try to push down the price. Maybe you can get one month's free rent or something to get you started.
2. Put the store in an area with lots of foot/car traffic. Visit the location you want to rent and see how many people come by.
3. Put the store in a poor area. Apparently lower income people use dollar stores much much more.
Other than that, I don't see what's the big deal about a franchise other than the name and maybe they can get products cheaper. I don't think anyone can tell you want to do in that case. Do the math. Will you spend more to buy the products yourself or more for the franchise even though the supplies MAY be less expensive?
I don't know much about it, so please only count me as another random voice on the internet
however, I would take caution and look at your profitability timelines, etc
having no idea where you are at it's hard to speak to the exact economic conditions ... but I think there are some traps out there
the first would be that dollar stores can run hot in times of economic distress .... are more stores popping up nationwide? have the franchise fees increased to the point where it can harm new investors? are they able to support an increased # of franchise holders? are they taking your good $$ and tying it up in bad ways that will impact you down the road?
also commercial real estate is a bit tricky right now ... i know some places are offering really good rents/incentives but many of them have some long term implications
to me a worst case would be to get locked into a commercial rent that is either going to escalate past your margins when a turnaround happens and/or the profitability of dollar stores will decrease with the turnaround
i have nothing but respect for those willing to stake a claim and go for these risks .... just be careful out there
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