Dollar General 2013 Annual Report Download - page 80

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, health and beauty care items, greeting cards,
basic apparel, housewares, hardware and automotive supplies, among others. 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 at $10 or less, 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 substantial 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.
Our Operating Priorities
We believe we continue to have significant opportunities to drive profitable growth by continuing
to expand upon our simple business model, which is largely focused on serving the needs of the low,
low-middle and fixed income consumer, a segment of the U.S. population that has continued to grow
over the past several years. We believe our four key operating priorities, initially established in 2008,
remain critical to the long-term growth and profitability of our company. These priorities are 1) drive
productive sales growth; 2) increase, or enhance, our gross profit rate; 3) leverage process
improvements and information technology to reduce costs; and 4) strengthen and expand Dollar
General’s culture of serving others.
Drive Productive Sales Growth. We believe our customer-driven merchandise mix and attractive
value proposition, combined with the impact of our remodeled and relocated stores provide a strong
basis for increased same-store sales. On a comparable 52-week basis, our same-store sales increased
3.3% in 2013, 4.7% in 2012 and 6.0% in 2011. Our average net sales per square foot, based on total
stores, increased to $220 in 2013 from $216 in 2012 and $213 in 2011 (which included a contribution of
approximately $4 from the 53rd week.)
In 2013, among other initiatives, we further expanded our perishables offerings and added tobacco
products to our stores, both of which contributed significantly to our same-store sales growth. We
believe that selling tobacco products and perishables drives more frequent shopping trips by our
existing customers and attracts new customers by making our stores more relevant to a broader
customer base. We believe we have opportunities to increase our store productivity in 2014 through
continued improvements in store space utilization, pricing and markdown optimization and additional
merchandising initiatives. We also plan to continue to remodel stores to update our appearance and
relocate stores to increase square footage, where needed, improve visibility and accessibility or to
obtain more attractive lease terms.
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10-K