The Dollar Tree[1]

The Dollar The Dollar TreeTree

Mission StatementMission Statement

Dollar Tree Stores, Inc. is a customer-Dollar Tree Stores, Inc. is a customer-oriented, value driven variety store, oriented, value driven variety store, operating at a one dollar price point. It operating at a one dollar price point. It will operate profitably, empower its will operate profitably, empower its associates to share in its opportunities, associates to share in its opportunities, rewards and successes; and deal with rewards and successes; and deal with others in an honest and considerate others in an honest and considerate way. The company's mission will be way. The company's mission will be consistent with controlled and profitable consistent with controlled and profitable growth. growth.

Background Info.Background Info. Established in 1953 and Established in 1953 and

headquarters in Chesapeake, VA.headquarters in Chesapeake, VA. Acquired numerous companiesAcquired numerous companies

– 4 similar companies from 1996-4 similar companies from 1996-20002000

As of Dec. 31, 2005:As of Dec. 31, 2005:– #75 on top 100 businesses#75 on top 100 businesses– Revenue: $3.3 billion (+8.6% Revenue: $3.3 billion (+8.6%

from 2004)from 2004)– # of stores: 2,914 # of stores: 2,914 – Stock price: $31.20 (DLTR/NYSE)Stock price: $31.20 (DLTR/NYSE)

Who & Why?Who & Why?

Low-Medium income householdsLow-Medium income households– Dollar Tree locations typically Dollar Tree locations typically

anchored next to mass anchored next to mass merchandisers (ex: Walmart & merchandisers (ex: Walmart & Target)Target)

ConvenienceConvenience Variety of MerchandiseVariety of Merchandise $1 price ceiling$1 price ceiling

Product CategoryProduct Category

Division 1Division 1– Party Goods, Stationery, Gifts, Crafts/NotionsParty Goods, Stationery, Gifts, Crafts/Notions

Division 2 Division 2 – Fashion Accessories, Softlines, Floral, Fashion Accessories, Softlines, Floral,

Valentine/Easter, Halloween, Valentine/Easter, Halloween, Thanksgiving/Fall Seasonal, Christmas, Thanksgiving/Fall Seasonal, Christmas, Baby, Books, ToysBaby, Books, Toys

Division 3 Division 3 – Candy, Food, Health/Beauty CareCandy, Food, Health/Beauty Care

Division 4 Division 4 – Household Consumables, Housewares, Pet Household Consumables, Housewares, Pet

Supplies, Electronics, and HardwareSupplies, Electronics, and Hardware

Types of storesTypes of stores

The Dollar Tree chooses three The Dollar Tree chooses three different store locations.different store locations.– Large strip center or mallLarge strip center or mall– Small strip centerSmall strip center– Stand alone store Stand alone store

What Do We Look For?What Do We Look For?

Regional centers, anchored by "big Regional centers, anchored by "big box" discounters or dominant grocery box" discounters or dominant grocery stores. stores.

Freestanding locations in a strong Freestanding locations in a strong retail corridor, with street presence retail corridor, with street presence and easy in/out and plenty of parking. and easy in/out and plenty of parking.

Shopping centers that are highly Shopping centers that are highly visible and have strong traffic counts. visible and have strong traffic counts.

Back door freight delivery, accessible Back door freight delivery, accessible by tractor-trailers by tractor-trailers

Store LayoutStore Layout

Anchored by large discount or grocery Anchored by large discount or grocery store (25-33%)store (25-33%)

Inside a mall (18%)Inside a mall (18%) Freestanding or strip centers (about Freestanding or strip centers (about

50%)50%) Dollar Tree Dollar Tree employs Grid employs Grid Layout in the Layout in the Corvallis Corvallis locationlocation

Strengths Strengths Pricing of merchandise at $1.00Pricing of merchandise at $1.00 Wide range of merchandiseWide range of merchandise Potential industry growth and square footage Potential industry growth and square footage

growth.growth.

CorvallisCorvallis– Located within a small strip center (other retailers Located within a small strip center (other retailers

to draw customers in)to draw customers in)– Little direct competitionLittle direct competition

WeaknessesWeaknesses

Customer ServiceCustomer Service Quality and quantityQuality and quantity Poor product presentationPoor product presentation Lack of cleanlinessLack of cleanliness

CorvallisCorvallis– Above!Above!– Location in relation to campusLocation in relation to campus– Strip mall retail selection (run down strip Strip mall retail selection (run down strip

aesthetics)aesthetics)– Poor signagePoor signage

Opportunities for the Opportunities for the Dollar Dollar TreeTree

Relatively slow growth in U.S market, but Relatively slow growth in U.S market, but stores that focus on discount merchandise stores that focus on discount merchandise will generally gain market share from will generally gain market share from independent more higher priced retailers.independent more higher priced retailers.– Larger stores are seeking tighter inventory control.Larger stores are seeking tighter inventory control.– Take advantage of manufacturers excess Take advantage of manufacturers excess

production capacity.production capacity. CorvallisCorvallis

– Students love anything cheapStudents love anything cheap– Not much direct competitionNot much direct competition– Large and small strip centers availableLarge and small strip centers available for retail space.for retail space.– Sponsorships Sponsorships

ThreatsThreats

Fixed price model limits power and Fixed price model limits power and gross margin enhancement.gross margin enhancement. – Margins pressured by merchandise cost, labor and Margins pressured by merchandise cost, labor and

shipping expenses and energy increases.shipping expenses and energy increases.– Competition for super centers and other discount Competition for super centers and other discount

stores, including other “dollar stores” (ie Dollar stores, including other “dollar stores” (ie Dollar Discount and Fred’s).Discount and Fred’s).

CorvallisCorvallis– Kmart, Bi-Mart, Rite-Aid, Ross (volume and quality)Kmart, Bi-Mart, Rite-Aid, Ross (volume and quality)

SourcesSources

http://www.stores.org/pdf/06%20JULY%201-http://www.stores.org/pdf/06%20JULY%201-100%20Chart.pdf100%20Chart.pdf

http://www.dollartree.com/http://www.dollartree.com/ http://mason.wm.edu/NR/rdonlyres/http://mason.wm.edu/NR/rdonlyres/

B269B202-3EBF-4F05-8AFA-88AFA9520E9C/B269B202-3EBF-4F05-8AFA-88AFA9520E9C/0/Dollar_Tree_REPORT.pdf0/Dollar_Tree_REPORT.pdf