The discount chain is opening three new bricks-and-mortar stores every day, betting that customers will respond to lower prices in places overlooked by other retailers.
Underpinning the fleet of stores are thousands of investors, ranging from high-net-worth individuals to big real estate investment trusts, eager to play landlord to Dollar General. They own most of the chain’s properties and collect rent for the duration of the lease, which typically stretches 15 years. Dollar General is seen as such a strong, dependable tenant that the cap rate, which measures return on investment, has fallen from 6 or 6.
“If they ever left, there literally may not be a replacement,” said Wolfe. “It’s particularly critical with Dollar General, frankly, because they do go into some really, really small markets.” Five dozen developers across the nation are in charge of building new stores, using a standard prototype that consists of a simple metal structure with linoleum floors, white walls and bright lighting. Frivolities like curb appeal don’t matter. If a store has a brick façade or fake windows, it’s because the town insisted on it to keep up a certain aesthetic.— Craig Johnson, founder of Customer Growth Partners.
It isn’t unlike the resistance once faced by other big chains, from Walmart to Barnes & Noble, with locals blaming them for undercutting small businesses on price and driving them out of business. “These overlarge chains are mom-and-pop killers,” said Cohen, the Columbia professor. Unionization threatens Dollar General’s reliance on cheap labor. Stores are thinly staffed, often having just two or three employees on the floor. The store manager alone may be in charge of opening the store in the morning. A company spokesperson said that the average store has six to 10 employees. The company’s pay often lags other big chains like Amazon and Target, which have raised minimum starting wages to $15 an hour nationwide to attract workers.
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