Dollar General 2009 Annual Report Download - page 15

Experienced Management Team. Our experienced senior management team has an average of
25 years of retail experience. Eight senior executives (Senior Vice President or higher) with significant
retail experience, in addition to numerous executives at the Vice President level, have joined the Dollar
General management team since our 2007 merger. These executives are primarily in merchandising,
distribution and transportation functions, as well as key support roles including store development,
human resources, finance and information technology. This expanded team, including veteran Dollar
General leaders, has demonstrated strong leadership capabilities and has made significant progress in
developing and implementing world-class retailing processes at Dollar General.
Our Growth Strategy
We believe we have the right strategy and execution capabilities to capitalize on the considerable
growth opportunities afforded by our business model. We derive our growth from three distinct sources,
including increasing store sales, expanding operating profit rates and growing our store base.
Increasing Sales. We believe the combination of our necessity-driven product mix and our
attractive value proposition, including a well-balanced merchandising approach, provide a strong basis
for increased sales. Our average sales per square foot increased to $195 in 2009 from $180 in 2008 and
$165 in 2007. We believe we will continue to have additional opportunities to increase our store
productivity through continued improvements in space utilization, better in-stock positions and
additional operating and merchandising initiatives, including:
•New products and categories. We have redefined our product line review processes significantly
over the past two years, aiding our efforts to identify areas for new product expansion and to
more quickly identify and eliminate underperforming items, resulting in substantial sales
increases.
•Improved space utilization. We intend to continue to expand product offerings and increase sales
per square foot through improved space utilization, including increased shelf height, efficient
utilization of floor and shelf space and improved product adjacencies.
•Improved execution in home, apparel and seasonal. Most of our recent merchandising focus and
changes have centered on consumables which have demonstrated strong sales growth as a result.
Our current merchandising management team has significant experience in basic consumer
trends, merchandise presentation, pricing and managing end-of-season sell-through and has
begun to intensify our focus on the apparel, home and seasonal categories.
•Improving store standards and operating hours. We are continuing to define and improve our
store standards and to adjust our store hours to better enhance our customers’ experience. We
believe that these improvements will continue to increase customer traffic and average
transaction amount.
•Expanding our loyal customer base. Our research indicates that over 85% of our customers have
shopped at Dollar General for over two years, indicating that we have a highly loyal customer
base. In addition, our most recent surveys indicate that our retention rate of new customers has
increased significantly over the past year, with approximately 94% of these customers indicating
that they plan to continue shopping in our stores with either the same or increased frequency.
We believe that our merchandising and operating initiatives will result in increased traffic and
sales and will continue to drive growth in our customer base.
•Remodels and Relocations. We believe we have significant opportunities available for our
relocation and remodel programs, which will further drive sales growth.
Expanding Operating Profit Rate. Another key component of our growth strategy is improving our
operating profit rate through enhanced gross profit and expense reduction initiatives. Our financial
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