Dollar General 2012 Annual Report Download - page 82

10-K
10-minute drive, of our stores. Our close proximity to customers drives customer loyalty and trip
frequency and makes us an attractive alternative to large discount and other large-box retail and
grocery stores which are often located farther away. Our low-cost economic model enables us to
serve many areas with fewer than 1,500 households.
•Time-Saving Shopping Experience. We also provide customers with a highly convenient shopping
experience. Our stores’ smaller size allows us to locate parking near the front entrance. Our
product offering includes most necessities, such as basic packaged and refrigerated food and
dairy products, cleaning supplies, paper products, and health and beauty care items, as well as
greeting cards, party supplies, apparel, housewares, hardware and automotive supplies, among
others. Our typical store opens at 8:00 a.m. and closes at 9:00 p.m. or 10:00 p.m., seven days per
week. Our convenient hours and broad merchandise offering allow our customers to fulfill their
routine shopping requirements and minimize their need to shop elsewhere.
•Everyday Low Prices on Quality Merchandise. Our research indicates that we offer a price
advantage over most food and drug retailers and that our prices are highly competitive with even
the largest discount retailers. Our ability to offer everyday low prices on quality merchandise is
supported by our low-cost operating structure and our strategy to maintain a limited number of
stock keeping units (‘‘SKUs’’) per category, which we believe helps us maintain strong
purchasing power. Most items are priced below $10, with approximately 25% at $1 or less. We
offer quality nationally advertised brands at these everyday low prices in addition to offering our
own comparable quality private brands at value prices.
Substantial Growth Opportunities. We believe we have significant long-term growth potential in the
U.S. We have identified significant opportunities to add new stores in both existing and new markets.
In addition, we have opportunities within our existing store base to relocate or remodel to better serve
our customers. As part of our growth strategy, we are developing and testing new store formats, with a
current focus on providing customers convenient access to more affordable perishable food items. See
‘‘Our Growth Strategy’’ for additional details.
Our Growth Strategy
We believe that our strategy and execution capabilities will allow us to capitalize on the
considerable growth opportunities afforded by our business model. Specifically, we believe we continue
to have significant opportunities to drive profitable growth through increasing same-store sales,
expanding our operating profit rate and growing our store base.
Increasing Same-Store Sales. We believe our customer-driven merchandise mix and attractive value
proposition, combined with our ongoing new store expansion strategy and the impact of our remodeled
and relocated stores, provide a strong basis for increased same-store sales. We define ‘‘same-stores’’ as
stores that have been open for at least 13 months at the beginning of each monthly accounting period,
and we include stores that have been remodeled, expanded or relocated in our same-store sales
calculation. Our average net sales per square foot, based on total stores, increased to $216 in 2012
from $213 in 2011 (which included a contribution of approximately $4 from the 53rd week) and $201 in
2010. We believe we have opportunities to increase our store productivity in 2013 through continued
improvement in our in-stock positions, improvements in store space utilization, price optimization and
additional operating and merchandising initiatives, including the addition of tobacco products and
further expansion of our frozen and refrigerated food offerings, value-priced seasonal items, and
electronics.
We remodeled or relocated 592 stores in 2012, and we plan to remodel or relocate approximately
550 stores in 2013. A relocation typically results in an improved, more visible and accessible location,
and usually includes increased square footage. A remodel typically involves new fixtures, signage and
3