Dollar General 2012 Annual Report Download - page 85

10-K
Our recent store growth is summarized in the following table:
Stores at Net
Beginning Stores Stores Store Stores at
Year of Year Opened Closed Increase End of Year
2010 ....................... 8,828 600 56 544 9,372
2011 ....................... 9,372 625 60 565 9,937
2012 ....................... 9,937 625 56 569 10,506
Our Customers
Our customers seek value and convenience. Depending on their financial situation and geographic
proximity, customers’ reliance on Dollar General varies from using Dollar General for fill-in shopping,
to making periodic trips to stock up on household items, to making weekly or more frequent trips to
meet most essential needs. We generally locate our stores and plan our merchandise selections to best
serve the needs of our core customers, the low to lower-middle or fixed income households often
underserved by other retailers. At the same time, however, customers from a wide range of income
brackets and life stages appreciate our quality merchandise and attractive value and convenience
proposition and are loyal Dollar General shoppers. In the last year, we have continued to see increases
in the annual number of shopping trips that our customers make to our stores as well as the amount
spent during each trip.
To attract new and retain existing customers, we continue to focus on product quality and
selection, in-stock levels and pricing, targeted advertising, improved store standards, convenient site
locations, and a pleasant overall customer experience.
Our Suppliers
We purchase merchandise from a wide variety of suppliers and maintain direct buying relationships
with many producers of national brand merchandise, such as Procter & Gamble, PepsiCo, Coca-Cola,
Nestle, General Mills, Unilever, Kimberly Clark, Kellogg’s, and Nabisco. Despite our broad offering, we
maintain only a limited number of SKUs per category, giving us a pricing advantage in dealing with our
suppliers. Approximately 8% and 7% of our purchases in 2012 were from our largest and second
largest suppliers, respectively. Our private brands come from a diversified supplier base. We directly
imported approximately $765 million or 7% of our purchases at cost (11% of our purchases based on
their retail value) in 2012. Our vendor arrangements generally provide for payment for such
merchandise in U.S. dollars.
We have consistently managed to obtain sufficient quantities of core merchandise and believe that,
if one or more of our current sources of supply became unavailable, we would generally be able to
obtain alternative sources without experiencing a substantial disruption of our business. However, such
alternative sources could increase our merchandise costs or reduce the quality of our merchandise, and
an inability to obtain alternative sources could adversely affect our sales.
Distribution and Transportation
Our stores are currently supported by eleven distribution centers located strategically throughout
our geographic footprint, including a distribution center in Bessemer, Alabama which began shipping to
stores in March 2012 and a leased distribution facility in Lebec, California which began shipping in
April 2012. We currently have a distribution center under construction in Pennsylvania which is
expected to begin shipping in early 2014. We lease additional temporary warehouse space as necessary
to support our distribution needs. Over the past few years we have made significant investments in
facilities, technological improvements and upgrades, and we continue to improve work processes, all of
which increase our efficiency and ability to support our merchandising and operations initiatives as well
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