Dollar General
Fundamentals of E-business
BUS 107
August 7, 2011

Abstract
In this report, I will discuss how Dollar General became the largest small box discounter operating more locations than any other retailer. Dollar General has major top quality brands in their stores such as Procter & Gamble, Kellogg’s, and Nabisco. I will also discuss the finances of Dollar General and give you a time line on Dollar General’s expansion over the years.

The company I chose was Dollar General. I have been a loyal customer of Dollar General for three years. I enjoy the selection of items at Dollar General with their low prices. Dollar general is not like other dollar stores, they have a large selection of food items that most grocery stores carry, which is why I like shopping there. Dollar General’s initial products/services are household items, gardening, automotive, apparel, and food. Dollar General’s market is geared towards all ages of customers. Dollar General is a public market which helps them to service all ages. Their main goal is to provide you with the best prices and customer service. Dollar General is an e-company. It utilizes the internet to help with their business transactions. They also use the internet to market and sell their products online. Dollar General is also a brick and mortar company because it is a business that deals with customers face to face while in the store. I feel that it is advantage to Dollar General to have both an e-company and brick and mortar, because it is expanding how they do business with the public. Dollar General has a long history of its existence. Dollar General was first named J.L Turner and Son Wholesale. This was in Scottsville, KY in 1939. The Turner’s then opened a store in 1955 called Turner’s department store which sold items for just a dollar. This store became the very first Dollar general in Springfield, KY. In 1967, Dollar General’s net income was 1 million. That meant business was doing great for that era. The next year, Dollar General became a public company. Dollar general’s most recent year’s revenue was in June of this year. Their sales increased 10.9 percent to $3.45 billion in the 2011 first quarter compared to $3.11 billion in the 2010 first quarter. Same-store sales increased 5.4 percent in the 2011 quarter and 6.7 percent in the 2010 quarter, with customer traffic and average transaction amount contributing to the same-store sales increases in both periods. The Company's gross profit rate decreased by 63 basis points to 31.5 percent of sales in the 2011 first quarter from 32.1 percent of sales in the 2010 first quarter. Rising commodity costs resulted in a LIFO charge of $3.6 million (10 basis points) in the 2011 period. Higher markdowns, primarily related to the reduction of winter home and apparel merchandise, had the most significant impact on the gross profit rate decrease. In addition, a shift in sales mix to more consumables, which generally have a lower gross profit rate, and higher transportation costs, resulting from increased fuel rates, contributed to the gross profit rate decrease. A lower inventory shrink rate and improved distribution efficiencies partially offset these decreases.
Selling, general and administrative expenses ("SG&A") were $766 million, or 22.2 percent of sales, in the quarter, a decrease of 60 basis points from last year's quarter. SG&A in the 2011 quarter includes $13 million relating to the expected settlement of two legal matters and SG&A in the 2010 quarter includes expenses totaling $15 million relating to a secondary offering of the Company's common stock by certain existing shareholders. Excluding these items, SG&A decreased by 50 basis points. As a percentage of total sales, retail labor costs represented the most significant decrease, followed by advertising expense and repairs and maintenance. Increased sales and the impact of other cost reduction initiatives also contributed to the decrease. Increased depreciation expense, primarily relating to new store fixtures and equipment, partially offset the SG&A improvements.
Operating profit increased by 11 percent to $322 million in the 2011 first quarter from $291 million in the 2010 period. Operating profit, as a percentage of sales, was 9.3 percent in both years. First quarter 2011 adjusted operating profit increased by nine percent to $335 million, or 9.7 percent of sales, from $306 million, or 9.8 percent of sales, in the 2010 period. Interest expense was $66 million in the 2011 first quarter compared to $72 million in the 2010 first quarter due to lower average outstanding borrowings resulting from the Company's repurchases of long-term obligations and lower interest rates.
The effective income tax rate for the 2011 quarter was 38.1 percent compared to a rate of 37.8 percent for the 2010 quarter. (Dollar General Financial Report, 2011) Dollar General’s main products are apparel and household items such as bath accessories, over the counter medicines. Dollar general has these items priced very low for their customers. Dollar General’s target market is older adults/ elderly who may need to find an item that another retailer may have at a higher price. Dollar general have some products that older adults who may be on a budget can afford. Most of Dollar general items are priced five to ten dollars less than other retail stores like Dollar General.
Dollar General’s main competitors are Family Dollar and Fred’s. These stores have some similar items but their prices are a bit higher than Dollar General. The company is using the internet to promote sales and their items. They also have coupons available for the customers to use in the stores. They also have the current ads for people who may not receive one in their local paper.
In conclusion, Dollar General has been in business for quite some time. It started out with a father and son and it became a large company over a forty- three year period and has over 9,000+ stores in 35 states.

References: http://newscenter.dollargeneral.com/company+facts/#p3 retrieved August 3, 2011 http://investor.shareholder.com/dollar/financials.cfm retrieved August 3, 2011