Dollar General 2012 Annual Report Download - page 89

10-K
Our plans depend significantly on initiatives designed to increase sales and improve the efficiencies, costs
and effectiveness of our operations, and failure to achieve or sustain these plans could affect our performance
adversely.
We have initiatives (such as those relating to merchandising, sourcing, shrink, private brand, store
operations, selling, general and administrative expense reduction, and real estate) in various stages of
testing, evaluation, and implementation, upon which we expect to rely to continue to improve our
results of operations and financial condition and to achieve our financial plans. These initiatives are
inherently risky and uncertain, even when tested successfully, in their application to our business in
general. It is possible that successful testing can result partially from resources and attention that
cannot be duplicated in broader implementation, particularly in light of the diverse geographic locations
of our stores and the fact that our field management is so decentralized. General implementation also
may be negatively affected by other risk factors described herein. Successful systemwide implementation
relies on consistency of training, stability of workforce, ease of execution, and the absence of offsetting
factors that can influence results adversely. Failure to achieve successful implementation of our
initiatives or the cost of these initiatives exceeding management’s estimates could adversely affect our
results of operations and financial condition.
In addition, the success of our merchandising initiatives, particularly those with respect to
non-consumable merchandise and store-specific products and allocations, depends in part upon our
ability to predict consistently and successfully the products our customers will demand and to identify
and timely respond to evolving trends in demographics and consumer preferences, expectations and
needs. If we are unable to select products that are attractive to customers, to obtain such products at
costs that allow us to sell them at a profit, or to effectively market such products, our sales, market
share and profitability could be adversely affected. If our merchandising efforts in the non-consumables
area are unsuccessful, we could be further adversely affected by our inability to offset the lower
margins associated with our consumables business.
We face intense competition that could limit our growth opportunities and adversely impact our financial
performance.
The retail business is highly competitive with respect to price, store location, merchandise quality,
assortment and presentation, in-stock consistency, customer service, aggressive promotional activity,
customers, and employees. We compete with retailers operating discount, mass merchandise, outlet,
warehouse club, grocery, drug, convenience, variety and other specialty stores. This competitive
environment subjects us to the risk of adverse impact to our financial performance because of the
lower prices, and thus the lower margins, required to maintain our competitive position. Also,
companies like ours, due to customer demographics and other factors, may have limited ability to
increase prices in response to increased costs without losing competitive position. This limitation may
adversely affect our margins and financial performance. Certain of our competitors have greater
financial, distribution, marketing and other resources than we do and may be able to secure better
arrangements with suppliers than we can. If we fail to respond effectively to competitive pressures and
changes in the retail markets, it could adversely affect our financial performance.
Competition for customers has intensified in recent years as competitors have moved into, or
increased their presence in, our geographic markets. In addition, some of our large box competitors are
or may be developing small box formats which may produce more competition. We remain vulnerable
to the marketing power and high level of consumer recognition of these larger competitors and to the
risk that these competitors or others could venture into our industry in a significant way. Generally, we
expect a continued increase in competition.
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