Dollar stores making a comeback

Tough times bring out the bargain hunters

Dollar stores have picked up substantial new business as consumers seek bargains during the recession.

Even shoppers who still buy their shoes at luxury department store Neiman Marcus will head to a dollar store for generic items such as sponges or even brand-name goods like Coke, said Cheryl Holland Bridges, director of the Center for Retailing Studies at Texas A&M University.

The stigma has lifted from shopping at these stores, Bridges said.

“Dollar stores have been establishing their credibility with a much wider range of brand names and household products,” said Wendy Liebmann, chief executive of WSL Strategic Retail in New York City.

Family Dollar Stores spokesman Josh Braverman said customers are shopping at Family Dollar more frequently and generally spending more on each trip, he said.

“Our core customer is a single mom with kids at home, in her 40s or so, and makes about $40,000 a year or less,” Braverman said.

New customers, including those with higher incomes, also are buying at Family Dollar for the first time, he said.

“It’s probably driven by the need to save a little bit of money,” Braverman said. “The Tide that’s on our shelf is the same Tide that’s in the grocery store but a little bit cheaper.”

Prices at dollar stores are the cheapest or among the cheapest for many items, especially party and holiday supplies such as gift wrap and napkins, according to Consumer Reports.

But nearly 80 percent of items in dollar stores sell for more than $1, the magazine said.

Dollar Tree, for instance, sells everything for $1 or less. But Dollar General has items priced at 85 cents, $1 and $5.50 on the cover of a recent flier for a local store.

Family Dollar also sells items for multiple prices, including an iPod for $25 and a Guitar Hero 3 video game for $20 for the holidays, Braverman said.

But shoppers should beware of potential quality issues when it comes to buying electrical products, jewelry and medication at dollar stores, Consumer Reports said.

* Extension cords, lamps and other electrical products might have fake UL labels vouching for their safety. Undersized wiring or other substandard components can overheat and cause a fire.

* Millions of pieces of children’s jewelry have been recalled because of high lead content1. New laws limit the amount of lead allowed, but older products might still be on store shelves.

* Watch for expired or soon-to-expire medication and food products. Many dollar stores buy directly from suppliers, but they also get merchandise from closeout companies.

* Some dollar stores consider all sales final. Dollar Tree said on its Web site that it does not offer refunds, but it will exchange unopened items if the buyer has the original receipt and the items aren’t seasonal.

Nielsen: Dollar Stores Attract Upscale Crowd

High- and middle-income shoppers are increasingly turning to dollar stores, according to Nielsen Co. research presented today at Nielsens Consumer 360 conference.

Dollar stores, which had generally offered cut-rate items at a dollar price point, no longer live up to the name. Only 23 percent of items stocked at dollar stores cost a buck or less.

The increased variety of products and price points are drawing an expanded and more affluent consumer base to these inexpensive retailers. Households with incomes higher than $100,000 spent 18 percent more at dollar stores in the second half of 2008 compared to the year prior. Among low- and mid-income households, dollar stores are outpacing other major consumer packaged goods channels. Overall, 65 million consumers shopped at a dollar store last year.

The troubled economy and rising costs in healthcare, education and food have caused everyoneeven those with high incomesto rethink where they purchase basic household goods, said Jeff Gregori, vice president of retail services at The Nielsen Co., in a statement. Today dollar stores are delivering more consistent selection and value.

The most commonly purchase items are napkins, paper towels, detergent, trash bags and cleaning and laundry supplies. Among edible items, candy, snacks and cookies register the most rings.

Frozen prepared foods, non-carbonated soft drinks and prepared food (deli) were the top three growth categories last year. Dried vegetables and grains, pasta, charcoal/logs, cheese, shortening/oil, soup and carbonated beverages followed.

With more shoppers having positive experiences at dollar stores, there is a significant opportunity for dollar stores and consumer packaged goods manufacturers to build loyalty and expand into new product categories, such as food and beverages and select health and beauty care, said Gregori.

Working hard for a dollar

John and Peggy Holland spend long hours at Southern Dollar, Holland Vending.

Peggy and John Holland aren’t afraid to get their hands dirty. They’re a hardworking couple and they’ve built both of their businesses with sweat equity.On any given day, it’s common to find them unloading trucks, stocking shelves, mopping floors or ringing up customers at the cash register.

Last year, they opened Southern Dollar, an independent retail store with all items priced for $1, at 3348 Wrightsboro Road. In 2002, they started Holland Vending, a business that provides vending services to 32 clients in the Augusta area.

The hours are long and the days are challenging, but they wouldn’t have it any other way, Mrs. Holland said.

“I enjoy it. I like being my own boss,” she said. “We went for the first six months with no days off. Finally, after Christmas was over, we had to take at least Sunday off and have two employees in here.”

Shoppers at Southern Dollar can choose from aisles of clothing, toys, school supplies, household supplies and cleaning products. The store has 123 balloons lining its walls, and party items are some of the best sellers.

Other top items include baby merchandise and school supplies. The store even accommodates special orders, especially for weddings and parties.

“We’re not your typical dollar store. We go above and beyond. If you ask for something, we’ll search for it,” Mrs. Holland said.

Customers come to Southern Dollar looking for a bargain. During the Christmas season, one shopper came from North Carolina to buy angel figurines with feathers.

“It was one of our hottest sellers. People were coming in buying 25 and 30 at a time,” Mrs. Holland said.

Holland Vending provides snack and frozen food machines, and coffee and soda machines, for local businesses. Most people don’t realize how much it takes to keep vending machines operating, Mrs. Holland said.

“A lot of people think it’s easy to do vending, but it’s really not. It’s really hard work,” she said.

Mrs. Holland spends most of her time at the store, so her husband has taken over the day-to-day operations for Holland Vending. He spends four days a week restocking machines and replenishing his supply of food and beverages. The typical work day is at least 10 hours, Mr. Holland said.

“I spend a lot of time driving. Everything goes in my big truck,” he said.

There’s never a dull moment at the dollar store.

There’s the time the ChapStick display went up in flames: About a month ago, several juveniles started a fire. The flames almost reached the ceiling, but Mr. Holland dashed to get the fire extinguisher and put out the flames in time.

Despite the emergency at the front of the store, customers didn’t even notice and kept right on shopping, Mrs. Holland said.

And just a few weeks ago, Mrs. Holland caught some kids shoplifting at the store — it was the second time in one week This time, the store owner wasn’t going out without a fight. As the young thief raced out of her store, Mrs. Holland jumped in her Ford Explorer and followed him as best she could, while talking to the 911 operator.

“It was the second one in a week, and I was furious,” she explained.

The store has a surveillance system, and Mrs. Holland expects to soon find out the criminal’s identity from the cameras.

Mrs. Holland is a go-getter and has inspired her daughter, Jennifer Holland, to want to open her own business. Her mother has taught her “to work hard for everything she wants and needs.” Her father works equally hard, she said.

“She is the hardest-working woman I’ve ever met. She’s strict in how she believes the store should run. She’s a great manager,” Jennifer Holland said. “She started on a whim and learned everything on her own.”

Military ties

Mr. and Mrs. Holland found a love connection through the military.

Mr. Holland was stationed in Germany with the Army, and Mrs. Holland was living overseas because she was married to a military officer. She later divorced, and then met Mr. Holland.

They married in Denmark in 1987. The Hollands lived the routine of any military family, moving every couple of years. Mr. Holland spent many years of his military career in Germany. He also was stationed in Korea, though his family remained behind in the United States.

Mrs. Holland followed her husband during his career, with their son, John, and her two children from her first marriage. Being a military wife was often challenging.

“It was tough. You have to learn to be very independent, especially when you’re in a foreign country,” she said.

To get her driver’s license in Germany, she had to learn some of the language. While in Germany, her husband had to leave for six months, and all three of her children came down with chickenpox simultaneously.

Living overseas provided a crash course in culture. While living in Germany, the Hollands had a barbecue and invited their neighbors. One of the items on the menu was corn on the cob. Corn is considered pig food in Germany, but luckily their neighbors weren’t offended.

The Hollands came to Fort Gordon from Germany in 1993, where Mr. Holland retired as a first sergeant in 2001. After his retirement, he started working for John Deere in Grovetown.

When her children were older, Mrs. Holland wanted to attend school. She took some classes at Kerr Business College in Augusta, where she earned a diploma as an office specialist.

“I just wanted something for myself. From there on, I just expanded out and took different jobs. One day, I decided to go into business for myself,” Mrs. Holland said.

In 1999, she started a paper route for The Augusta Chronicle , which she ran for six years.

“My hat’s off to anybody who runs a newspaper route,” Mrs. Holland said. “You have to know what house to throw. Every day they’re switching (the route) — they’re adding people or taking them off. Not to mention it’s 3 o’clock in the morning,” she said.

In 2002, Mrs. Holland started Holland Vending from her home. Her Ford Explorer was the company car for the next four years.

“I ran the vending business during the day, and in the middle of the night I threw newspapers. It was tough, but I survived it,” she said.

The Hollands supplied the vending machines at the companies they served. The average machine costs $3,500 to $4,000. Coffee and frozen food machines cost about $6,000. To start the business, they charged items on credit cards, Mr. Holland said.

Several years after starting the business, they were able to get a loan from Georgia Bank & Trust, which helped them consolidate their debt.

Over the years, the Hollands added new clients and eventually needed a larger truck to accommodate orders.

Mr. Holland now uses a custom-designed truck with an air conditioning unit and generator at the top so the candy won’t melt. There’s also a freezer for the frozen food and ice cream.

“When I go home, I just plug it in at the house. I don’t have to unload anything. Nothing melts, and it can get as hot as it wants. It was all designed for her when she first started to make things easier,” Mr. Holland said.

One of their store employees assists him with the vending business.

“It makes it go quicker when I have some help. When I do a soda or snack machine, for one person, it’s time consuming,” Mr. Holland said.

“You’ve got to have strength, too. Those racks of soda are really heavy,” Mrs. Holland added.

For one of their clients, Macuch Steel Products Inc., they must climb two flights of stairs with each soda rack.

They receive new clients mostly through their listing in the telephone book.

“The main thing about vending, it’s not a get-rich-quick thing,” Mr. Holland said. “When you spend the money for a machine, you’ve got to make sure that where you put it, you’ve got enough people using it to get your money back.”

Bargain dreams

Mrs. Holland considered many business ventures over the years, including restaurants.

“This one just stuck with me, with the way the economy was headed and everything,” Mrs. Holland said of the dollar store.

Her children were shocked when she told them about her plans.

“I thought she was crazy. She was already doing the vending and I didn’t think she was going to take on opening a dollar store,” Jennifer Holland said.

“They were putting their whole life savings on the line,” added Amy Holland, another daughter.

Mrs. Holland also wanted to open the store because she needed her husband’s help during the day. The vending machines often required repairs, but Mr. Holland had to report to work.

It was difficult to find a store for lease, Mr. Holland said. Many shopping centers didn’t want them to open a dollar store because it was direct competition for other discount stores. They finally found their Wrightsboro Road location and opened in June 2008.

The 6,000-square-foot store needed a lot of work. The building had green carpet and brown walls. They repainted the walls and put in new floor tiles.

It took them a week to come up with the name.

“Of course, she had to pick a name like Southern. With signs, you pay by the letter,” Mr. Holland joked.

The dollar store has three employees, including daughter Jennifer.

The daily tasks can be overwhelming, but Mrs. Holland doesn’t collapse under the pressure.

“I guess it’s like everything else I’ve done. I’ve always done overwhelming things,” she said. “After a while, you get yourself going in it, and you find the quickest ways to get things done.”

Mrs. Holland works at least 10 hour days at Southern Dollar. She spends hours on the Internet searching for merchandise. In many instances, merchants are required to spend at least $1,000 to $1,500.

“You can get things here you can’t find in a regular dollar store. People say it’s totally different, the way it’s set up,” she said.

Customers can find coaxial cable, phone cords, car supplies, gardening tools and rent receipts, all for only $1.

The store has a lot of repeat customers, including college students and kindergarten and preschool teachers. Churches also buy supplies for homeless shelters.

The store even sells licensed products, such as Hannah Montana.

They recently started a “plus section,” which contains items that cost more than $1.

“I’ve got little kids’ outfits out there, tops and bottoms for $2,” Mrs. Holland said.

“Our concept is to keep everything separate. In a lot of stores, it’s mixed. It will always be its own section,” Mr. Holland said.

True partners

Mr. and Mrs. Holland are two peas in a pod. Their work ethic and outlook on life complement each other. Both of them grew up working hard.

“We enjoy it. It’s in our blood, I guess,” Mr. Holland said.

Born in Fall River, Mass., Mr. Holland has been working since he was 13 years old. He attended Catholic school, and in the seventh grade he began helping the janitor with repairs at the school and collected money as an usher.

Through high school, he worked at the church sweeping floors, cutting grass, emptying trash, painting and shoveling snow. He said that he wanted to have his own money.

His mother, Lorraine, worked in the mills as a seamstress. His father, John, worked for the water department. Mr. Holland joined the military at 18 and worked his way up the ranks, eventually being placed in charge of military units.

“He’s the type of person who likes to go for things, like me. When he wants something, he goes after it,” Mrs. Holland said.

Amy Holland said that Mr. Holland, the only father she has ever known, is shy, has a “type-A personality” and loves Ford trucks and Mustangs. He still gets up early each morning to run. Her mother is tough, family-oriented and loves cooking, she said.

A native of Lakewood, Ohio, Mrs. Holland had a rough childhood. Her father, Harry, was an alcoholic, and her mother, Marlene, was a stay-at-home mom. They later divorced. Mrs. Holland, the youngest of four siblings, dropped out of school in the ninth grade and worked two jobs to help her mother support the family.

At 17, Mrs. Holland left home and moved in with her sister in Oklahoma, who encouraged her to get her GED. She married young and had two children by age 19.

“It made me stronger, and it made me grow up quickly, too,” she said.

When Mr. Holland was in the military, she received a message that her father was dying and wanted her to come to his bedside. She guessed that he wanted to apologize, but he died before she made it there.

Despite her rocky start in life, Mrs. Holland fought to have a better future. She feels that her story could motivate other young people to believe that regardless of their childhood, they can accomplish their dreams.

Mr. Holland said that his wife has led the way for their family, including buying their first house and starting the businesses.

“She’s strong, independent. I had never thought about the store. She came up with everything. Now I don’t have to work for someone else anymore. I can work for myself,” he said.

He said Mrs. Holland would like to open another store, “as soon as she catches her breath on this one.”

“We’re your average Joe. We really worked hard to get to where we are today. Maybe it will inspire people. You just have to have the drive, really,” she said.

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