Stock Your Cellar for the Perfect Storm

The dollar store business format is especially well-positioned to weather a confluence of intertwined negative forces facing retailers that could be called a perfect storm. The dollar stores are aiming for the bottom market, those shoppers who consider their storm cellar to be the bargain basement. The smaller retailer can emulate this with a thrift store format. But all retailers—including those catering to an upscale demographic—could benefit from incorporating two characteristics of dollar store retailing:

• Feature limited-stock, limited-time offerings. The dollar stores do this largely from necessity. They get a good deal on merchandise which suppliers are anxious to sell. The message is “Buy it now because it may not be here for long.” Even with higher-priced items, this fear of missing an opportunity motivates purchase behavior. Realize this is related to, but different from, the “treasure hunt” appeal, which says you’ll be surprised by what you find. Treasure hunts work best with unusual items. “Buy it now” works best with commodity items.
• Mix fun with functional. People shop at dollar stores because saving money is functional. Still, Dollar Tree made lots of profits toward the start of the Great Recession by selling party supplies at low prices. Many of the Dollar Tree stores have freezers and coolers to stock grocery items and then included among those grocery items fun alternatives such as ice cream. Researchers from New York University and University of Pennsylvania found that when people put a healthy food item into their grocery shopping cart, they become much more likely to select a fun food item next. In choosing the fun food item, they're still interested in the nutritional value, but from the opposite point of view. They might very well be selecting the fun item because it's not nutritious.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Have Fun Items Throughout the Store