Dollar General 2013 Annual Report Download - page 81

Our new store expansion strategy also is a critical element of our priority to drive productive sales
growth. We have confidence in our real estate disciplines and in our ability to identify, open and
operate successful new stores. In 2013, we opened 650 new stores and increased our selling square
footage by 6.6%. We recently completed a study of our remaining new store opportunities utilizing new
site selection technology. The results of our initial review affirm our confidence in our ability to
continue to expand our store base at the current pace for the foreseeable future. In 2014, we plan to
open 700 new stores and increase our square footage by over 6% as we continue to expand in our core
markets and newer states.
Increase, or Enhance, Our Gross Profit Rate. Another key component of our growth strategy is
increasing, or enhancing, our gross profit rate.
We remain committed to an everyday low price (‘‘EDLP’’) strategy that our customers can depend
on. To strengthen our adherence to this strategy and still protect gross profit, we utilize various pricing
and merchandising options, including zone pricing, markdown optimization strategies and changes to
our product selection, such as alternate national brands and private brands, which generally have higher
gross profit rates. In addition, we maintain an ongoing focus on reducing transportation and
distribution costs as well as minimizing inventory shrinkage and damages. The addition of tobacco
products and our continued expansion of perishable food items in 2013 contributed significantly to
increases in sales and gross profit dollars, although, as expected, at a lower gross profit rate.
Importantly, we believe these categories are instrumental to attaining our goals of driving more
frequent shopping trips and attracting new customers. Furthermore, we believe our inventory shrinkage
rate increased, in part, due to our addition of various items with relatively higher retail prices, many of
which were in our health and beauty departments.
Over the long term, we will continue our efforts to reduce product costs through further expansion
of our private brands, shrink reduction, foreign sourcing, the use of online procurement auctions and
incremental distribution and transportation efficiencies. We also plan to continue to introduce new
products that meet our customers’ needs into our home, apparel and seasonal categories, which
generally have higher gross profit rates than consumables.
Leverage Process Improvements and Information Technology to Reduce Costs. As part of our ongoing
effort to improve our cost structure and enhance efficiencies throughout the organization, in 2013 we
made further progress in our efforts to simplify our store processes. This progress contributed to a
reduction in store labor as a percentage of sales. In addition, we realized cost savings from our
centralized procurement initiative and other expense reduction efforts. In 2014, we expect to achieve
further savings from our procurement initiatives and will remain focused on controlling those expenses
that are within our control. Note that certain factors primarily related to our cash incentive
compensation plan caused certain expenses in 2013 to be less than those expected in 2014 and beyond,
as explained in further detail in Management’s Discussion and Analysis of Financial Condition and
Results of Operations contained in Part II, Item 7 of this report.
Strengthen and Expand Our Culture of Serving Others. The mission of ‘‘Serving Others’’ has been
key to the culture of Dollar General for many years and we recognize the importance of this mission to
our long-term success. For customers this means helping them ‘‘Save time. Save money. Every day!’’ by
providing clean, well-stocked stores with quality products at low prices. For employees, this means
creating an environment that attracts and retains key employees throughout the organization. For the
public, this means giving back to our store communities through our charitable and other efforts. For
shareholders, this means meeting their expectations of an efficiently and profitably run organization
that operates with compassion and integrity.
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