20 18, 18, a famous "Shiyuandian" in China launched an IPO, and it is planned to raise 10 billion dollars for global business development. On the other side of the ocean in the United States, 1 yuandian company "Dollar Tree" has become a fortune 500 company with a market value of $25.5 billion.
The dollar tree was born in 1993, and all the goods in the store are 1 dollar. 1995, Dollar Tree is listed on NASDAQ with a market value of $225 million. After the financial crisis in 2008, the physical retail industry in the United States faced a double blow from the economic downturn and Amazon. Retail giants Macy's and Sears are in recession, and Wal-Mart is also busy dealing with the impact of Amazon.
However, 1 yuandian has risen rapidly in this environment. In 20 18, 650 new stores were opened in Dollar Tree, and it is planned to open again in 2065 438+0009 1000. By the end of 20 18, Dollar Tree had about 1 5,000 stores, and together with Dollar General and Le Group, it dominated the entire American1yuan store market. How did the dollar tree do it?
The "dollar tree" rose during the window of the US economic downturn. In 2008, the American economic crisis broke out, and the average annual household income dropped rapidly, which gave birth to the rapid growth of the tree $ 10.
A survey of 20 18 shows that 79% of the customers of Dollar Tree are low-income groups with an annual household income of 50,000-1 10,000 dollars-these users are highly price-sensitive, have low personal financial liquidity and prefer instant consumption with low unit price. The positioning of 1 yuan store just meets the needs of this part of users.
As a result, low-income families and middle-class families hit by the economic crisis began to buy daily necessities from large shopping malls such as Wal-Mart and Taji.
In the location of the store, the "one-dollar tree" is also as close as possible to this group of core consumers. Dollar Tree located its own store near Wal-Mart, and took advantage of Wal-Mart's drainage ability to bring customers to its own store. At the same time, some small towns with small population and unable to support Wal-Mart's profit are also excellent choices for Dollar Tree to open stores. These towns are often located in remote areas, and the overall economic development level is not high. For consumers in small towns, the time and fuel cost of driving to Wal-Mart are high, and the dollar tree has replaced Wal-Mart as a convenience store, providing consumers with more convenient daily shopping options.
Generally speaking, the shop area of Dollar Tree is small, about 700- 1000 square meters, which is about110 of Wal-Mart. On the one hand, small shops can reduce the rental cost, on the other hand, it also makes it easier for Dollar Tree to obtain suitable shops. Dollar Tree shows in the financial report of 20 18 that the company expects to open 26,000 stores in the United States, which means that for every 1 Wal-Mart store, five Dollar Trees open stores in more sinking towns.
Interestingly, the dollar tree does not invest much in e-commerce channels, because consumers value the convenience of the dollar tree living in the local area. In addition, the customer unit price of Dollar Tree is often low, about 13 USD (Wal-Mart is 40 USD). Because of the logistics cost, it is not a good choice to develop online channels. Therefore, the existing e-commerce companies in Dollar Tree all adopt the solution of placing orders online and offering them by offline stores, which saves the cost of logistics in the last mile.
In terms of choice, the "dollar tree" focuses on three categories:
Among them, daily consumer goods contributed nearly half of the sales to the dollar tree-the category characteristics just needed by high frequency, which enabled consumers to continue to return to the store. Although the profit margin of daily consumer goods is low, high passenger flow can promote the sales of durable goods with high profit margin.
In addition, although seasonal products account for a small proportion of sales, they have absolute just-needed attributes and can also play a drainage role at various time points of the year.
In the store operation of Dollar Tree, the core strategy is to create a "treasure hunt" shopping experience for customers, so that customers can have fun in shopping and increase their purchases of non-necessities.
The unified pricing of 1 USD can create stable low-price expectations, and the USD tree can provide users with goods that exceed the price expectations of 1 USD through supply chain capabilities, so that users can have psychological experiences of "taking advantage" and "buying treasures".
The best example comes from videos on Youtube, an American video website. Many bloggers have photographed the experience of visiting the dollar tree from the first perspective-what impressed them most was the excitement before visiting the store and kept saying, "Wow, this is only $65,438 +0?" (This is only one yuan? )。
"1 yuan" naked eye steak
On the other hand, seasonal goods ensure the new speed of stores, and different stores often have different product choices, thus maintaining the freshness of customers. In store design, the use of bright colors can stimulate the desire to shop, and the product display is dense or even a little messy, which also strengthens the "treasure hunt" experience to some extent.
However, behind the low price, product quality is particularly critical. 1 yuan goods will inevitably cause consumers to doubt the quality of goods. There are a lot of consumer comments on dollar tree products on foreign websites, and there are many lists similar to "the most worth buying goods for dollar tree" and "the goods that dollar tree must not buy". After finishing, we found that "durable goods" are the most popular category for consumers.
Gift cards, stationery, holiday decorations, etc. They are all bought cheaply at the dollar tree, and the quality of the products is similar to that of specialty stores. In contrast, food, cosmetics and personal care products are polarized. Middle-class consumers are worried about the safety of goods and will only buy them when the dollar tree provides branded goods. Another part of consumers think that, after all, it only needs $65,438 +0, which does not require high quality of goods, so it can be used.
In order to maintain the low price of $ 1 and ensure profitability, the cost control of supply chain is particularly critical.
Most of the goods on the dollar tree come from their own brands. Through the cooperation with upstream manufacturers, we can customize the product size, packaging and composition to meet the needs of cost control.
Different from the traditional retailers' strategy of highlighting their own brands, it is often difficult for consumers to identify which are the own brands of the dollar tree in the store. To some extent, this strategy is to maintain the consumer's "treasure hunt" shopping experience, and to avoid brand goods making consumers buy too purposefully and affecting the overall sales.
Dollar Shu own brand cosmetic
In addition to its own brand, Dollar Tree 10% SKU comes from factory tail goods. Some factories have out-of-season or overcapacity goods, and the dollar tree reduces the procurement cost by buying in large quantities. At the same time, because the dollar tree has a very large channel flow, there are also big brands willing to customize products for the dollar tree. For example, Procter & Gamble once customized toothpaste of a specific size for Dollar Tree. In some big brands, the dollar tree is sometimes cheaper than Shang Chao, because the rent and labor costs are lower. Behind the seemingly low price, Dollar Tree achieved a gross profit margin of 30% through its supply chain capability, which was higher than Wal-Mart's gross profit margin of 25%.
Price comparison of brand goods in dollar tree and supermarket
However, the dollar tree is not only satisfied with sinking the market. Middle-class consumers have always been the users that the dollar tree wants to compete for. Some dollar tree stores have started trial operation in the "dollar+"area, trying to sell goods above $65,438+0. At the same time, the experience gained by Dollar Tree in purchasing FMCG brands will also help Dollar Tree to further create products suitable for middle-class consumers.
In terms of categories, the dollar tree began to expand the proportion of "food" categories to further increase consumers' repurchase. Among them, frozen meal, as a kind of food with high consumption frequency, will become the focus of category expansion. At the same time, the company also plans to open 65,438+0,000 stores in 2065,438+09 and expand stores below 700 square meters.
To sum up, the success of the dollar tree comes from several aspects:
1, through the penetration of the sinking market, it makes up for the vacancy of large supermarkets such as Wal-Mart, and provides consumers with low-cost and convenient daily consumption choices with the unified pricing of 1 yuan to seize consumers' minds;
2. Wisely avoid online e-commerce giants such as Amazon in the competition. After all, the price of 1 yuan is not attractive enough, and the lower customer unit price is more difficult to make up for the logistics cost, so it is a market that online e-commerce companies such as Amazon will not set foot in;
3. Give play to the "local" advantage, create a novel and interesting shopping experience in the store, and build a competitive barrier that online e-commerce is difficult to replicate;
4. Based on the supply chain system of its own brand, control costs and achieve profitability.
Looking back at China, Mingchuang seems to have played a brand-new game of "1 yuan store" by opening stores in big shopping malls, constantly exploring prices, signing contracts with large IP companies and preparing for listing. So, can China's sinking market breed the next "dollar tree"?