Reasons to Consider Opening a Dollar Plus Store
By: Bob Hamilton
For those examining the potential of starting a dollar store there are many, many strategic decisions to be made. Each of those decisions inevitably
affects the final overall success of the business. Dollar store costs and ultimately dollar store profits ride in the balance as the final make-up of the business is determined. One of the most challenging decisions involves determining whether you are opening a dollar plus store or you will stay with the tradition everything is only one dollar format. In this article I will examine some of the reasons this might be the right time to open a dollar plus retail business.
Reason #1) As your dollar store costs continue to increase for everything from merchandise to freight, rent to payroll, and almost everything else, the tradition dollar only format doesnt provide the room required for adjusting your retail prices to reflect the increases you are experiencing. It traps you into a set price and your dollar store profits are squeezed potentially over time to the point where none remain.
Reason #2) Dollar plus format enables you to generate much higher average sales per item sold. In a dollar only format the sale price of a single item averages $1. Yet in the dollar plus format, your average sale can be much higher. Depending on your final decision regarding the types, brands and overall quality of items sold, your average sale price per item can amount to $2, $3, or even $5 or more.
Reason #3) If your average shopper purchases 6 items, your total sale is $6.00 in a dollar only format store. Yet in the dollar plus format, even if the average number of items purchased is reduced to 4 items with an average sale price of $3 your average sale is $12. In fact you could have a reduction to 2 items per sale and still sell exactly the same amount in gross sales. Imagine the reduction in dollar store costs associated with labor if you sold 1/3 less items through your store. Many of your other expenses will also drop based on less merchandise being handled.
Reason #4) In the dollar only format if your cost of goods sold is 60%, your gross profit is 40-cents per item sold. Maintaining the same 40% gross profit, but with dollar plus sales changes the number of items required to achieve the same total gross profits. In fact, your average gross profit per item on a $3 average sale becomes $1.20. Build sales in a dollar plus store and you have much greater leverage to build your dollar store profits as well.
All of these reasons combine to make opening a dollar plus store a viable format option worthy of consideration. There are no guarantees when you open a business. Do your research.
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To your dollar plus store success!
Article Source:
http://www.articlecity.com/articles/business_and_finance/article_11437.shtml
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