Dollar General 2013 Annual Report Download - page 83

deliver low retail prices while generating strong cash flows and investment returns. Our initial capital
investment in new stores and relocations varies depending on the lease structure or ownership as well
as the size and location of the store and the number of coolers appropriate for the location.
We generally have had good success in locating suitable store sites in the past, and we believe that
there is ample opportunity for new store growth in existing and new markets. In addition, we believe
we have significant opportunities available for our relocation and remodel programs.
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
2011 ....................... 9,372 625 60 565 9,937
2012 ....................... 9,937 625 56 569 10,506
2013 ....................... 10,506 650 24 626 11,132
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 selection, in-stock
levels, pricing, targeted advertising, 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 2013 were from our largest and second
largest suppliers, respectively. Our private brands come from a diversified supplier base. We directly
imported approximately $725 million or 6% of our purchases at cost (10% of our purchases based on
their retail value) in 2013. 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.
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10-K