Dollar General 2015 Annual Report Download - page 79

10-K
Our private brands come from a diversified supplier base. We directly imported approximately 6% of
our purchases at cost in 2015.
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.
Distribution and Transportation
Our stores are currently supported by thirteen distribution centers located strategically throughout
our geographic footprint. We recently broke ground on our fourteenth distribution center in Wisconsin.
We lease additional temporary warehouse space as necessary to support our distribution needs. We
continually analyze and rebalance the network to ensure that it remains efficient and provides the
service our stores require. See ‘‘—Properties’’ for additional information pertaining to our distribution
centers.
Most of our merchandise flows through our distribution centers and is delivered to our stores by
third-party trucking firms, utilizing our trailers. In addition, vendors or third-party distributors ship
certain food items and other merchandise directly to our stores.
Seasonality
Our business is seasonal to a certain extent. Generally, our highest sales volume occurs in the
fourth quarter, which includes the Christmas selling season, and the lowest occurs in the first quarter.
In addition, our quarterly results can be affected by the timing of certain holidays, the timing of new
store openings and store closings, and the amount of sales contributed by new and existing stores. We
typically purchase substantial amounts of inventory in the third quarter and incur higher shipping and
payroll costs in anticipation of increased sales activity during the fourth quarter. See Note 14 to the
consolidated financial statements for additional information.
Our Competition
We operate in the basic discount consumer goods market, which is highly competitive with respect
to price, store location, merchandise quality, assortment and presentation, in-stock consistency, and
customer service. We compete with discount stores and with many other retailers, including mass
merchandise, warehouse club, grocery, drug, convenience, variety and other specialty stores. These
other retail companies operate stores in many of the areas where we operate, and many of them
engage in extensive advertising and marketing efforts. Our direct competitors include Family Dollar,
Dollar Tree, Fred’s, 99 Cents Only and various local, independent operators, as well as Walmart, Target,
Kroger, Aldi, Walgreens, CVS, and Rite Aid, among others. Certain of our competitors have greater
financial, distribution, marketing and other resources than we do.
We differentiate ourselves from other forms of retailing by offering consistently low prices in a
convenient, small-store format. We believe that our prices are competitive due in part to our low-cost
operating structure and the relatively limited assortment of products offered. Purchasing large volumes
of merchandise within our focused assortment in each merchandise category allows us to keep our
average costs low, contributing to our ability to offer competitive everyday low prices to our customers.
See ‘‘—Our Business Model’’ above for further discussion of our competitive situation.
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