How Dollar Stores Really Make Their Money

Every year, dollar stores see higher and higher
earnings, but how can a store that seems like it’s giving things away turn itself into a
multi-billion-dollar enterprise? The answer is simple: that dollar isn’t always
the great deal it appears to be. Here are their secrets. Whether times are good or bad, you can still
count on people to flock to dollar stores because they have the one thing everyone loves:
convenience. Sales for Dollar General are always on the
upswing, with the chain seeing an increase of 3.7 percent between 2017 and 2018, regardless
of the state of the economy. Take it from Dollar General CEO Todd Vasos,
who had this to say about their regular customers: “We have seen no sign of trade out or trade
up from our core customers. Even in a good economy, [they are] still looking
for value and convenience.” So, basically, no matter how much money people
have, they still want something that bigger grocery stores can’t give them. Dollar stores are not just convenient because
their items are cheaper, but also because there seems to be one on every corner — and
that makes them perfect for a quick fill-in trip between your weekly grocery runs. These stores are also typically smaller than
the ones in a big chain like Walmart, which means that you can usually get in and out
with your emergency bag of dog food, a handful of snacks, or supplies for your kid’s art
project in just a couple of minutes. The fact that most people are on to this,
means dollar stores are always making money — even if customers buy just a few things. “Your gloves! Tomato seeds! Fertilizer! Hey, Pat Sajak, I’ll solve the puzzle! GARDENING!” It’s common knowledge that the success of
a business is largely based on its location. If you aren’t in a place where you can offer
something that the local community needs, you aren’t going to have much of a customer
base. This is why Dollar Tree and Dollar General
are mostly located in areas where people with a lower income level reside, and where big
box stores aren’t easily accessible. According to CNN Business, 75 percent of Dollar
General stores are located in towns that have less than 20,000 people. The chain targets sparsely populated rural
areas where it can be the only game in town when it comes to buying food or other supplies. In most cases, the closest grocery store is
more than 15 or 20 miles away, making the dollar store a much more convenient option. Dollar General also strives to put locations
in areas that are known as “food deserts.” These areas — which aren’t just limited
to rural towns, but may also include underserved urban areas — are places in which fresh
food is not readily available. To take advantage of this, dollar stores offer
snacks and are even working to expand their food sections, giving people even more reason
to shop there. More customers means more dollars, and those
dollars soon add up to big bucks. It is no secret that a store that sells most
items for $1 was made in the interest of appealing to customers who don’t have a ton of money. These shoppers don’t just want a better deal
than they can find at other stores, they need one. Dollar stores capitalize on this need by opening
stores in lower-income areas and presenting themselves as a cheaper and more convenient
option. If you don’t have to drive half an hour to
get to a full-size grocery store, you don’t spend as much money on gas, which helps to
save a lot of money in the long run. The savings only continue when you arrive
at the store and find thousands of items apparently offered at a much lower price point than competitors. “It’s going to be a savings stampede!” “SAVINGS. STAMPEDE!” Before you start filling up your cart with
all kinds of $1 items, there’s something you should know. That dollar is not always as good a value
as it seems. Stores like Dollar Tree and Dollar General
count on the customer being distracted by the appearance of a discount and not taking
the time to check the difference between the sizes and the quality of the items at their
stores. Because of this, unsuspecting customers end
up actually paying more for an item than they would have somewhere else, and it usually
doesn’t last nearly as long. In reality, it is grocery stores that offer
the highest discounts, although they see lower earnings overall. For every dollar spent by a customer at Dollar
Tree, the company makes a profit of 35 cents. Walmart, for example, makes only 24 cents
per dollar. This is because the items at dollar stores
cost less to manufacture, and the company isn’t losing any money by keeping them priced
at just a dollar. The number one best trick carried out by dollar
stores is that they are actually giving you less for your money. You might think you found a great deal by
buying a box of aluminum foil for $1, but check the length of the roll. Let’s just take that as a single example — one
of several compiled by That $1 box of foil you buy at Dollar Tree
is 15 feet long, but if you spend more at Walmart and get a larger box, it works out
to over 18 feet per $1. The same applies to products throughout the
store. As if this weren’t bad enough, you should
know that according to Macon Brock, one of the founders of Dollar Tree, dollar store
owners are basically counting on people to not think so they don’t notice what’s going
on behind the curtain. He wrote in his book: “When a customer walked into our store she
could shut off her brain. She didn’t have to think, didn’t have to calculate
how much she was spending. All she had to do was count – ‘One, two,
three, four, five, six. I have six items and I have six dollars. I can buy this.'” At a dollar store, you get what you pay for. While a dollar might be a deal for some items,
you can’t expect something long-lasting and high-quality if you can pay for it with loose
change. Whether it’s Dollar General, Dollar Tree,
or any other chain of dollar stores, one of the biggest ways that the business saves money
is by selling items that are made of cheap, flimsy materials. And sometimes, that’s downright dangerous. According to the Washington Post, children’s
toys are one of the worst things you can buy at a dollar store. Many are made with tiny pieces that come off
and can be choked on, and they fall apart surprisingly quickly because they are made
of parts that cost next to nothing to put together. Electronics and things like power strips are
a bad idea too. After one use (or 20), they could malfunction
and ruin your devices because they weren’t made with the proper materials and safety
standards. Most people don’t expect their dollar store
purchases to last forever, and when one thing breaks, they just go back and get a replacement
for another dollar, which means more money in the dollar store’s pocket. Instead of buying a higher-quality item at
another store for $5 once, they end up buying the same, cheaply made item ten times at the
dollar store and spending twice as much without noticing, which is all part of the company’s
plan. If you’ve ever been inside a dollar store,
you will have noticed that it’s much smaller and more compact than a typical grocery store. This is no accident. According to Business Insider, a Dollar Tree
store is usually small, with an average size of just 8,000 to 12,000 square feet. They say that’s about one-eighteenth of the
size of the average Walmart — so it’s not just a small difference. The stores are designed this way so that you
can easily go through the entire store in just a matter of minutes, making it more likely
that you can find something you need or want without much searching. There is also a method to the way the aisles
are arranged that affects what shoppers buy. Typically, seasonal items like Christmas decorations,
party favors, or summery cups and pinwheels meet you as soon as you walk in the door,
tempting you with the stores’ newest inventory right off the bat. The products that shoppers buy most frequently,
such as food or children’s toys, are placed in the back, meaning that you have to walk
through the entire store — and past all the other tempting deals — to get to them. This set-up has been proven to sell more products
because people leave with a lot more than what they came in to get. “Oh… when did you get this?” “One minute ago…” The average small, independent grocery store
employs around 14 people, but the average Dollar Tree and Dollar General only employs
eight. Dollar stores are typically smaller and don’t
see the huge rush that other retailers do, so they can afford to get by with only a handful
of workers per shift. As a result, they don’t have as many employees
to pay and provide insurance and benefits for, so they don’t see as much money going
out as other stores do. The downside to this is that most dollar stores
are located in areas in which people are struggling economically. While the arrival of a new Walmart or Target
in town could mean many more jobs for the locals, a new Dollar Tree really doesn’t. So while the chain itself is saving money
and raking in more and more of it, this money isn’t being spread out into the community,
which is one of the major complaints about this type of establishment. Business Insider called private labels a dollar
store’s, quote, “secret weapon.” Most big box stores offer private label products
too, but this practice is especially lucrative for stores like Dollar General and Dollar
Tree. A private label is usually one owned by the
store, and they typically cost less to manufacture, and therefore appear on the shelves with a
price that is less than half of what name brands charge for the same item. At one point in time, this strategy didn’t
work, as people were loyal to specific brands because they knew they would get the quality
they were looking for. As the economy shifted, though, and the quality
of even brand name products changed, people began to grow more open to private label brands. Now, thanks in part to millennials making
up a large portion of the shopping public, people are less focused on which brand is
best and are more focused on things like price and environmental impact, meaning that private
labels, generics, and unknown brands have quickly become the most appealing options. When people are buying their store brands,
dollar stores are raking in a lot more profit. Above all, the main way that dollar stores
make money is that they offer a way for low-income people to get the everyday items they need
for an affordable price. For this reason, the large majority of dollar
stores are located in areas that see a lot of “economic distress.” Unfortunately, dollar stores don’t really
help to fight economic distress — they cause more of it. According to Fast Company, dollar stores deliberately
target the country’s more economically vulnerable communities. Once they set up shop, they wipe out all competition
in the form of grocery stores and independent small businesses, making them the only choice
when it comes to food and other necessities. While the dollar store itself makes millions
off these communities, the people in them are left with no healthy food options and
no locally owned businesses, resulting in even less income for the already-stressed
economic environment. Dollar stores become the only game in town,
and make money because they offer something people think they can’t get anywhere else. Because of this, they are taking much more
than people’s dollars. Check out one of our newest videos right here! Plus, even more Mashed videos about shopping
are coming soon. Subscribe to our YouTube channel and hit the
bell so you don’t miss a single one.

100 comments on “How Dollar Stores Really Make Their Money”

  1. concerned citizen says:

    There are only a few items at dollar tree that i buy. I probably never spend over $5 at a time and only go about 1ce a month. Id never buy food there. As far as low income i would say ours gets 50%. It convenient and cheap. What more could you want. Wish i owned one.

  2. Allen Goodman says:

    Clover Valley for life !

  3. Stan Getts says:

    A good awful company that works it's staff like slaves!

  4. Chuck Bright says:

    My wife is how they make so much money

  5. Clockwork says:

    I get my water from dollar tree. But Wegmans sells it for 90.

  6. Clockwork says:

    I thought everyone knew that products were half the size at dollar stores. 😂😂😂

  7. Aurα вírdч says:

    Its only good for house hold stuff and mostly good junk food and some good healthy food and I've seen good stuff, like veggie burger or turkey and some brand named veggies. And holiday stuff. And stuff that's not good is shit quality food, electrical stuff and some poor or low things like decorations.

    And some Dollar stores (I think) are beyond awful and some cases overpriced and has crapper products and toys that's lead based things.

  8. Big Okie says:

    I buy my sunglasses at DollarTree, three pairs a week.

  9. Andrew Murray says:

    Chemicals. I don't need $12 Tide ™ with ultra mega stain fighting action and Oxy(r) power! I need C13H9S8N1 i.e fat and lye. And I don't need to pay some hippie $30/oz at the farmer's market to make it in their bathtub at home either.

  10. BillQuag - says:

    @10:29 I've never seen any Dollar Store wipe out grocery stores. They simply don't have the inventory and variety to compete…

  11. Jennifer Vu says:

    The dollar sells 99c condoms next to 99c pregnancy tests, coincidence?

  12. just bob elliot says:

    I live in a town in NC , there are two major grocery stores with in a block on the same side of the street. On the other side of the street there is a dollar tree,dollar general,family dollar And a rosses all with in three blocks,so I don't know what your talking about,n I don't think you do eather

  13. Lou & Ronnie fan 500 says:

    You may pay more but waste less if you don't need bulk.

  14. lucas mcquillan says:

    I like the 99 cent store better

  15. Bfine, Cme says:

    I was sad to see a Dollar General being built in my neighborhood. I guess that means we'll poor

  16. melody parra says:

    Not in my local dollar stores

  17. DeadlyD0right says:

    my dollar stores look like a mess, all the aisles merchandise is all over the place. only go for tooth paste and soap.

  18. Mashed says:

    Which is the best dollar store?

  19. Awesome says:

    Mashed, great video! Enjoy your Tuesday!😍

  20. C H says:

    The red pepper at 4:48, "Oh no!" as it fell on the floor.

  21. SURAJ KUMAR DEV says:

    If recession takes place it will be bankrupt

  22. logtec1977 says:

    China buys your garbage, they manufacture it into crap and sell it back to you at the dollar store.

  23. Derek McAdams says:

    I tell you how they make their money, its because they call it a dollar store but yet actually sell stuff for way more than a dollar. Went to my local dollar general the other day and even just canned food was almost $3.00 and bags of chips were 3-4 dollars.

  24. N R says:

    I'm probably one of the few people that can walk into a store and come out with only one or two things. Even when I was a member Costco I didn't by very much.

  25. Edward Johnson says:

    I love the Dollar Store!

  26. Haizel Dawn says:

    about the add. your never secure.. your never secur unless you can be smart about being safe or walk with another person who can at least be a witness.

  27. Mo Poppins says:

    I live in a mixed-income area, so there are dollar stores intermixed with Walmarts and Targets and many kinds of grocery stores (mainstream and ethnic). They can all coexist because the population density and diversity are there. I love that they ALL have the opportunity to thrive.

  28. Denise Gordon says:

    Best post ever but nobody will care. 🤕

  29. Rupi Singh says:

    I smell Another Walmart add give back to the community wtf they might effect a suburb Walmart effects the whole city.

  30. In The Mix says:

    Dollar General, Family Dollar and the 99 cent store are not really dollar stores.

  31. Sulaymaan Kingseed says:

    Poison sold in the ghetto.

  32. sleepX tv says:

    In dollar tree everything's a dollar

  33. Jay Tee says:

    I like when they get overstock so I get a 22oz box of cereal for $1

  34. Phantom Warrior says:

    its simple dollar stores usually buy the leftovers of whole sale suppliers for like $0.10 and then resell for like $1.

  35. Wayne Harriman says:

    Dollar Tree is the only true dollar store I've seen in the last 30 years. Dollar General and Family Dollar are frauds full of shit priced way over a dollar, priced even higher than Wallmart.

  36. Lucas Mendoza says:

    i bought a fast charger for my phone at Dollar Tree , for only $1
    still running good since April 😊

  37. bob m says:

    You talk like you know everything but you only get a 40% grade as most of what you say is B.S.

  38. Steve Jarvis says:

    @3:20 I almost barfed out my beer and had only one.

  39. Steve Jarvis says:

    Just a warning about dollar stores to everyone that may not know. Be sure and check the quality, expiration dates and quantity for your buck. Sometimes there's good deals in them but don't be fooled by the numerous disappointments you will find out about in time. Sometimes it is worth it to spend a little bit more elsewhere. One example is that you should never buy tools from them. Pure garbage tools. There are many other examples though, how ever I don't want to write a novel.

  40. Linda Wright says:

    It is hard to beat the prices of Dollar Tree stores if you are shopping for party supplies for a child's birthday or for Christmas decorations and wrapping paper. The school supplies can also be a bargain. Yes, some of the packaged food sold at dollar stores is in smaller sizes than what you find in regular supermarkets or are closer to their "best used by" dates. If you know what the regular prices are in supermarkets, you can then do comparison shopping at dollar stores. It is hard to beat $1 for a frozen/microwaveable BBQ pork sandwich from the Dollar Tree compared to a similar sandwich from McDonald's that costs far more or $1 for a bottled milky coffee drink at Big Lots or the Dollar Tree compared to a very similar product with the Starbuck's label that sells for more than twice the cost.

  41. christie bowman says:

    Dollar General and Family Dollar are NOT CHEAP. They are convenience stores with high prices when you compare. They take advantage of poor people.
    The Dollar Tree sells stuff that should cost way less than $1

  42. Daver G says:

    In Vancouver we have a Japanese yen store, and most of the stuff is $2 and 99% of it is made in Japan. Very cool place

  43. angelsrone says:

    One of my favorite places

  44. It_isWhat_it_is True says:

    Wowww 🤥 dollar stores are bad news folks…

  45. It_isWhat_it_is True says:

    So if you see them around it means desert food town or low income 🤪 areas… SMH

  46. E J says:

    Don't forget the quality & ingredients of the food items are questionable too. Look at the labels people‼‼‼‼‼‼‼‼‼

  47. Pond and garden sanctuary says:

    Wish my local stores looked as nice as those.

  48. Kenn's Instagram At: i000 says:

    🤔 Dollar Tree is actually the only one that sells things for a Dollar!

  49. thelastcashew says:

    Big Lots is the same way.

  50. David says:

    Things to buy at Dollar stores…1) Greeting cards, 2) cheep Stickers 3) Drinks to go 4) The containers of milk that last a few months (i don't use much milk) 5) Craft supplies

  51. Bruh says:

    I got a small power strip, just to add more outlets at the $1 tree a year ago and it's working fine…. knocks on wood

  52. SmellyCat says:

    Dollar General & Family Dollar prices are NOT $1. ONLY Dollar Tree is $1.

  53. martin carroll says:

    My nephew is president of internet security and a board member at dollar tree/family dollar and boy does he have a huge salary.

  54. ann Early says:

    11:14 like dollar tree gives employees insurance or benefits.

  55. Anick Gauthier says:

    As someone who works retail (not in a dollar store) and someone who also loves to compare values,couponing and price matching, I can confirm that I can get a lot of things cheaper in a supermarket than at the dollar store, dollar stores are pretty convenient for certain things though! You just have to compare, theirs actually apps for that and be mindful!

  56. Baby Inuyasha says:

    There's a dollar store next to a Target here

  57. Nick Lee says:

    Damn this is deep.

  58. Grant M says:

    As of Wal-Mart never sells anything that is crap. I guess the authors of this video spend a big chunk of their money at Nordstoms and Whole Foods. They really need to make a video so they can look down on regular people who don't have a lot of cash. Some of the points are valid but the snooty arrogance of this narrator's voice is so nauseating

  59. Chris Jones says:

    Dollar Tree is Monopoly That cant Lose.

  60. T.K Jenkins says:

    No wonder I see more dollar stores in the hood!!!!

  61. Yoshi Boles says:

    I only go to Dollar stores to get Pokemon cards, and sometimes name brand toys if a good deal.

  62. Cheryl Brown says:

    Why don’t you try investing today and be free from your 9-5 jobs. Contact Noah_Jen_trading on instagram or on mail at [email protected] or +15303506527 on WhatsApp(he is a sure guy when it comes to investments) if you need help about forex and Binance trading,Bitcoin mining,credit score. He is the best. INVEST IN HIM AND TAKE YOUR PROFIT ASAP.

  63. Mark MacRae says:

    Tax. It's all over a dollar!

  64. Baron Will says:

    How they make money in the UK sometimes, is when a lorry crashes the insurance pay for all the stock even if nothing was harmed in the crash, so they sell that stock cheap to discounters.

  65. James jr Plumb Master says:

    All Locations are in bad neighborhoods with most shoppers on My hard earned money such as EBT !!!!

    Then to kick salt on a open wound, is when your standing in a long line you happen to get that one persons complaining about (1) 10 cent bag and why were they charged….

  66. Flor’s Vlogs says:

    So true, I save more when I buy bigger items in Walmart

  67. William Smith says:

    I love Dollar Tree and I do not love you shitting on it.

  68. Jack pine Savage says:

    I live in Northeastern Michigan, also called the "Appalachia" of Michigan. Four new dollar stores have been built here within the last couple of years. My cabin is twenty five miles away from Wal-Mart. Gasoline isn't cheap. I like to see the new dollar stores being built in my community.. What I see when a new dollar store is built are my friends and neighbors with jobs. I've lived during hard times, when the unemployment rate in my county was 16%.. I'm thankful someone has confidence in our local economy, no matter how poor we are.

  69. Maricarmen7 Vlogs says:

    I look my receipts everything is dollar lol.

  70. Apexone says:

    I've actually paid attention to the fact that items that you buy at a dollar store are sometimes smaller or less than what you can get at a big box/grocery store.

    You'd really have to turn your brain off to not notice because it's pretty obvious.

  71. Marsha Hanson says:

    Dollar General is great for big bags of dog food.

  72. Holly Paige says:

    All thanks to [email protected] I’m debt free


    Imma stick to Walmart and target unless it’s for a snack and there no Walmart

  74. Debbie Harding says:

    Check the size of the package for $1.00. It is SMALLER than the same item in a "regular" store and often can be purchased at that "regular" store for less than $1.00 if there is a sale……….be AWARE BEFORE YOU PURCHASE!!!!!

  75. Yours Truly Shauna says:

    Potential Dollar Tree Store Manager here. I turned this position down.
    Your neighborhood Dollar Tree makes anywhere from 1.2 million dollars a year to 1.6 for the higher volume (busy) stores. The store receives anywhere from 1000 to 3000 boxes per week however the Store Manager is ONLY allowed to schedule 2-3 PEOPLE per shift including themselves. This usually means 2 associates on register (sometimes 1 Associate on register that's why the lines are SO LONG AT DOLLAR TREE) and 1 STORE Manager usually unloading the truck/boxes and stocking the shelves.
    District Management expects Store Management to Scan every individual item into inventory and make sure all 3000 boxes are unpacked and put on the shelves before the next week's shipment.
    Additional Store Managers are REQUIRED to work AT LEAST 50 hours per week for around 37k. With pipe dreams of one day being asked to move to Virginia and work at the corporate offices. Family Dollar Corp. is owned by Dollar Tree so its the same thing. No Thank you.

  76. happyfeet 3 says:

    Liza's favourite store

  77. johnny feathers says:

    The Dollar Generals have popped up like weeds all over my town. Every where you go there’s a new Dollar General…Fuck that they need to be building more kFC’s , I have to drive way out of my way because the nearest one is like 15 miles away…lol oh yeah and there’s only one damn Krispy Kreme in my whole town…

  78. JPavilion2 says:

    In the video they didn’t want to say “in the hood” or “poor communities”
    Trust me … with poor communities you see a lot of these stores…

  79. membear says:

    Dollar General and Family Dollar are not dollar stores.

  80. Manwell Rnegron says:

    targeting poor and uneducated

  81. Ryan McMullen says:

    On the way to my job there are like 7 or 8 dollar General on the way there

  82. Erik Raigoso says:

    When it comes to buying toys at dollar tree,only buy the toys you absolutely know it was five bucks or more at another store.

  83. Ibhenriksen says:

    People are dumb lol "Oh it's the dollar store so it must be cheaper!" Uh no, the same shampoo at Target that sells for $ 4.99 sells at the Dollar General for $6.00. It's little things like that how they make a profit.

  84. Erdie5 says:

    Dollar Tree and Dollar General have been incredibly handy on two separate vacations where there was no other choice for 20+ miles. No, they're not always the best bargain. But when you've got a kid that gets sick, it's 8 pm and the closest city is 25 miles away, Dollar Tree, Dollar General and Family Dollar are a lifesaver. And I like them anyway, very convenient and always more affordable than the local grocery store for anything non grocery.

  85. Dave S says:

    Dollar Tree has the best greeting cards
    I know that most people don’t mail cards anymore but since I do, I buy them there

  86. Ezra Velez says:

    I still love n shop at the dollar tree only

  87. TC Mayes says:

    You are just exaggerating way too much !

  88. Rebeka Woods says:

    I rarely go to the 99 cent store as I prefer target but they do have some good quality stuff and better brands like dove and even some OGX.

  89. randy Baker says:

    donft get it how doo thay get it how abot u tel me in frigin inglish. not tjis frigin sciense tock

  90. randy Baker says:

    mumvo jumnbo

  91. gorymarty56 says:

    I buy bread and paper products and candy there.

  92. Z E says:

    I feel like people should stop buying from these store since the money doesn't go back to the community.

  93. Kevin Grzesiak says:

    Why is every at dollar General not a dollar. Their shit is like the same price is like any other store…

  94. slamdeathgrindmachine says:

    They make their money by not paying employees worth dam and running really short staffed

  95. REESE says:

    Family Dollar and Dollar General not Dollar stores tho. Things are priced far way more than a $1 @ both of them

  96. REESE says:

    Here in Atlanta there’s Dollar Tree stores in rich cities I.E. Sandy Springs, Smyrna, etc so to say Dollar stores are only in poor neighborhoods is a complete lie.

  97. Feric N Anf says:

    You guys think they can’t compete with big supermarkets. I live in Miami and every dollar general or dollar tree and even family dollar is placed in front of a big chain supermarket such as Walmart or publix.

  98. MAP1086 says:

    Companies aren't there to help the community, they're there to make money and offer a service. Big grocery stores never make it in these urban areas because of the losses in theft and people don't buy as much. As it states, big stores make less per dollar. So people who have dollar stores in their communities should be grateful. At least it's not a quickie mart.

  99. Shannon Vlogs says:

    Did I see a “Fresh Food” sign above a frozen foods section?

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