Dollar General Corporation is United States largest small-box discount retailer headquartered in Goodlettsville, Tennessee . Dollar General offers both name brand products and generic merchandise . Its competitors include Family Dollar, Dollar Tree which also operate in deep discount segment of US retailing. The following case study discusses about the various political, economic, social and technological forces that Dollar General have faced and their impact on the company. The report also talks about the critical success factors of Dollar General. The report is concluded by summary of key learning’s from the case study.
PEST Analysis for Dollar General
Political: In the year of 2006, Janet Calvert, a former store manager, filed a complaint that she was paid less than the male storage managers because of her gender, in violation of the Equal Pay Act and title VII of Civil Rights act of 1964. There were other plaintiffs which were added to this case. This case resulted in Dollar General reaching a settlement in principle, by which it would pay .
5 million to the plaintiffs and their legal charges costing around $3.25 million. The company was expected to receive reimbursement of $15.9 million from its Employment Practices Liability Insurance if these payments were approved by the court. This case did impact Dollar General Approach towards pay setting policies and procedures for new store managers . Economic: During the recession period from 2007-2009, the customers of Dollar stores suffered from unemployment and lower purchasing power. And even the people from higher income brackets started purchasing the dollar store products for seeking larger bargains. This led to the increase in the customer traffic and larger sales for Dollar stores. Dollar general captivated upon this scenario and continually reviewed its merchandise mix, and adjusted it accordingly. It expanded its offerings of consumable goods to serve customers’ needs and increased its sales .
Dollar General captured trade-down shoppers who came from middle and higher level of incomes (who generally had not shopped at dollar stores for all these years, but came during the recession to find bargains). Over the time the company adjusted its pricing strategy for items by pricing it from $1 to no more than $10. And managers of this company also believed that the company’s ability to attract customers of varying economic status depends on offering both national and store brands . This way Dollar General was able to satisfy the customers of varying economic status, which resulted in more sales and profit for the company. Social: Consumer psychology during the recession period was to get the products at a lower price and the store to be available at a convenient distance (not too far). During this time Dollar General varied its price from $1 to no more than $10 and offered consumable goods at a very reasonable price. And it has also opened new stores within the reach of 3 to 5 miles, so that every customer is able to get easy access to their neighbourhood store .
This resulted in satisfying customer’s need as well as increasing company’s sales. Technology: During the year 2008 when the cost of the fuel increased, the Dollar General’s distribution costs went up and the company’s gross profit was affected. In order to mitigate this problem, the company completed the installation of a voice pick system by the year 2010 in all the distribution centres, so that the employees in the distribution centres can communicate with warehouse software systems by speech recognition . This was a good strategic move by the company as its use is expected to increase rapidly over the next few years with evolving technological advancements. The company also installed new analytical and monitoring tools to assist with inventory shrinkage reduction efforts , which was a major part of company’s effort to increase gross margin. CRITICAL SUCCESS FACTORS’s for Dollar General
In this case for instance, good leadership and management was a CSF for Dollar General. As we can see that, there was major expansion of business activities and stores with the entry of David Perdue (the company’s new general manager) in the year 2003. In addition, the company through his leadership also initiated Project Alpha, which was based on extensive analysis of performance of each store and the company’s inventory management model. Few of the structural changes that company undergone during this project include shutting down over 400 underperforming stores and writing off old inventory. These strategic alignments have been the major part of company’s CSF, as it was able to focus more on most viable stores and new inventories which have led the company into high effectiveness in their business activities . Moreover, the company specialized in low, middle and fixed income families as their major customers. This has been used as the company’s CSF, as this group forms the largest proportion in the market. Even though the purchasing power of this category is low when compared to the higher segments in U.S. but their huge population is a contributory factor for success of the company . Dollar General Social responsibility
Rick Dreiling, Chairman and CEO of Dollar General, explained the company’s commitment towards literacy through the Dollar General Literacy Foundation program. The company actively engages customers in a way: “At each and every cash register of a Dollar General store, customers get to learn about the Dollar General Literacy Foundation program through brochures with a postage-paid reply card that can be mailed in for a referral to a local organization that offers exclusively free literacy services. Further, they also have the opportunity to donate money to this worthy cause. In 2012, Dollar General Customers donated more than $10 million to directly benefit the Dollar General Literacy Foundation’s efforts in helping people learn how to read, speak English or get their General Education Diploma (GED) .” Key learning’s from the case
From this case one can clearly understand that Dollar General played its cards right. When there was recession, the company retained its regular customers and attracted new customers by adjusting sales mix in order to drive more customer traffic and larger purchases. It expanded its stores by taking the advantage of weak real estate market to lower its operating costs for future years. Careful management of merchandise categories had allowed Dollar General to increase its same-store sales. Private label brands during recession helped increase the growth of the company. These all strategic moves which were made under efficient leadership and management transformed the company into a leader in the dollar store retail sector with sales of more than $13 billion by 2011 .
 Dollar General, Retrieved October 11 2014, http://www2.dollargeneral.com/About-Us/pages/Index.aspx  Dollar General, Retrieved October 11 2014, http://en.wikipedia.org/wiki/Dollar_General  Parnell, John A. (2014). Strategic Management: Theory and Practice. 4th edition. SAGE Publications.  Dollar General Case Memo Marketing Essay, Retrieved October 11 2014, http://www.ukessays.com/essays/marketing/dollar-general-case-memo-marketing-essay.php  Amway, GM, and Dollar General among corporations making ‘Good’ A Goal, Retrieved October 10 2014, http://www.forbes.com/sites/devinthorpe/2013/08/29/amway-gm-and-dollar-general-among-corporations-making-good-a-goal/2/