Dollar General 2014 Annual Report Download - page 77

10-K
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. As such, we believe our emphasis on affordability continues to
resonate with our customers, propelling growth in sales, unit share, and dollar share as indicated
in syndicated market share gains. 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 to relocate or remodel locations within our existing store base to
better serve our customers.
Our attractive store economics, including a relatively low initial investment and simple, low cost
operating model have allowed us to grow our store base to current levels and provide us significant
opportunities to continue our profitable store growth strategy.
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 low and
fixed income consumers, segments of the U.S. population that have continued to grow over the past
several years. We believe our four key operating priorities are critical to the long-term growth and
profitability of our company. These priorities are 1) drive productive sales growth; 2) 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
2.8% in 2014, 3.3% in 2013 and 4.7% in 2012. Our average net sales per square foot, based on total
stores, increased to $223 in 2014 from $220 in 2013 and $216 in 2012.
In 2014 we continued to innovate in our ongoing pursuit to maximize the sales productivity of our
stores, experiencing continued success of our 2013 introduction of tobacco products with positive
comparable same-store sales after the anniversary. Among other initiatives, we further expanded our
perishables offerings to meet the needs of our customer and renewed our focus on $1 to $5 items, with
more than 75% of our SKUs at 2014 year-end priced at $5 or less. 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
3