Dollar Store and Closeout Store; The Perfect Match

By Bob Hamilton
As time passes, it is becoming clearer and clearer the day of the traditional dollar store has gone by the wayside.  It is fast going the way of the five and dime store.  Having a lid at 99¢ or $1 is just not working with costs of operation and the dollar merchandise you sell rising almost by the day.  For most, the torch was first handed off to the dollar plus store concept.  But with expenses continuing to move ever-higher making a reasonable profit margin takes more than just adding a few cents to the retail price.  Read on for a strategy which can draw lots of repeat shoppers while offering those operating a dollar store the potential to make a realistic business profit.

Start by setting up the core of your business with high-value dollar merchandise.  Offer all the basics shoppers seek in this portion of your store.  Do not hesitate to add-in about 20%-30% of the products at dollar-plus prices.  In fact this is a key to maintaining some reasonable level of profitability.

Next add-in a good selection of closeout items to go with the dollar merchandise and dollar plus items.  This could start with as little as a pallet or two of items.  However allotting at least 10% and as high as 25% of sales floor space to these products is ideal for a mid-size or larger store.

While it takes a bit of searching to locate the best closeout items, they are available.  Best of all, you will be able to sell these items at deeply discounted prices since your cost will be literally pennies on the dollar.  Your shoppers will be thrilled and so will your bank account.

Once you have established your new store, closely monitor sales for all types of products.  It is important to understand how sales are spread across all categories.  This information will provide details about which types of products to replenish and when.  It will also disclose valuable information regarding profits being made. 

Carefully adjust the amount of area allotted to each category of product as the sales information flows.  Reduce the breadth of offerings of slow selling items to create more room for better selling items.  This newly created room may also be perfect to experiment with new products.

Dollar merchandise, dollar plus merchandise, and closeout products can come together to create an exciting shopping experience for your customers.  As your shoppers discover the many products you offer, the average purchase in your store can also climb.  These extra dollars in sales mean more and more profit for your business.