DOLLAR TREE STORES, Inc.

Written by Jonathan Nelson
Columbian staff writer
Photos by Dave Olson

Overview
Dollar Tree stores operate at the bottom end of the retail world in a niche called “extreme value retailers.” Translation: nothing in these stores generally costs more than $1 and at Dollar Tree, the company’s name is true to its pricing. The company has 3,219 stores scattered across 48 states.

Expansion to the West Coast caused the company to build a $40 million, 663,000- square-foot warehouse in Ridgefield to supply stores in Washington, Oregon and Idaho. Like its other facilities, an automated racking and conveyor belt system moves a multitude of goods throughout the building and onto trucks that spread out around the region.

The company has recently modified the average size of its stores to be between 10,000 and 12,500 square feet.

Roots
Dollar Tree dates back to 1953 when K.R. Perry opened a variety store in downtown Norfolk, Va. The company morphed in the 1970s and 1980s into a toy store chain spread throughout several states. The first Dollar Tree store opened in 1986 in Dalton, Ga., and by the end of the year five such stores existed. In 1991, the company sold off its toy business to KB Toys and focused on the dollar store concept.

The company went public in 1995 and a year later bought Dollar Bills Inc., a Chicagobased chain of 136 stores. In 1998, 98-Cent Clearance Centers in California was acquired and in 1999 Dollar Tree merged with Only $One stores of New York.

The acquisitions continued through 2006.

Strategy
Dollar Tree stores sell a variety of products that include housewares, toys, seasonal items, food, health and beauty aids, gifts, and books, all of which cost $1 or less. Unlike competitors, Dollar Tree doesn’t fill its stores with close out items, which represents less than 15 percent of its inventory. Instead, the company has made arrangements with name brand producers to manufacture goods in smaller packaging to hit the $1 target price. About 40 percent of Dollar Tree’s goods are imported, primarily from China.

Customers also comment that they like Dollar Tree stores better than competitors because the outlets are clean, well lit and filled with brands familiar to them.

Results
The company ended its 2007 fiscal year in January with sales of $3.9 billion, up 17 percent from the previous year. Net income for the year was $192 million.

The company’s annual report credits much of that growth to store expansion, a strategy that will continue with under-served areas becoming a target for new sites. And rather than fearing big box competitors, Dollar Tree prefers to open its stores in the shadow of the retail giants. The idea is to siphon some of that foot traffic into Dollar Tree where shoppers can get the basics faster.