Dollar Store Dilemma

Maintaining Dollar Store Profits & Margins

As I have pointed out a number of times, consumers have to be aware of the latest method that manufacturers are using to either increase or maintain profit margins in an economy with the cost of the raw materials are increasing.

Consumers complain or buy less when they see prices rise. Therefore, nobody in the retail chain from manufacturers to store owners wants to see the final price go up. Still, with increase int the price of raw materials as well as inflation, how do those retailers and product creators keep their profits intact?

One way is to simply make packages smaller, reducing the amount of content in them.

This is a particularly interesting area to look at for those who shop at discount stores known as dollar stores or 99 cent only stores.

If the name and entire retail concept of your store is that everything costs only a dollar, then you can’t raise prices to earn more money and generate more profit. Your only choice then is to shrink the products.

I have noticed that happening continually in dollar stores over the last few years. I’m worried that the standard size of items in dollar stores is about to become what we used to consider travel sizes!

Just as an example, I’ve watched the size of household disinfectant sprays come down incrementally from 12 ounces to the current 8 ounces. That is a 33% decrease in size while the consumer continues to pay the same retail price.

What products have you noticed displaying this trend?

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