More and more consumers determined to save money are winding up at deep-discount retailers popularly known as dollar stores. These relatively small stores—including Dollar General, Family Dollar, and Dollar Tree—offer food, clothing, and household items at deep discounts. Discounters such as Target and Walmart offer a wider selection, but more consumers are trading down to find the best possible prices.

Competing with Walmart on price is hardly an easy strategy.

When Kathleen Guion took charge of store operations and store development for Dollar General, she got to work initiating a whole host of changes. Many of these were aimed at controlling costs and helping the stores run more efficiently, and many of the changes involved improving the technology used by store employees, bringing it more in line with industry standards.

Guion found that Dollar General used some truly lowtech approaches to activities involved in running the stores. When trucks pulled up with deliveries, for example, store employees pulled cartons out of the truck one by one and carried them into the store for stocking the shelves. And whenever items languished on shelves too long, the same employees would repack them in boxes and carry them into the back room for storage. Not only were these methods slow, but employees hated lugging the boxes around. Calling her change program EZ Store, Guion simplified those jobs. She bought large wheeled bins called rolltainers, which employees use to move products from the trucks to back rooms to the sales floor. And when products don’t sell as expected, the EZ Store plan calls for marking down the price low enough that the products do get sold. Not only does EZ Store make working for Dollar General more enjoyable by eliminating undesirable chores, but the greater efficiency gives employees more time to serve customers.

Under Guion’s direction, Dollar General also upgraded its computer systems to deliver better information faster.
The company introduced handheld scanners connected to an inventory management system so employees can quickly and accurately see which items need to be replenished and when. Computers linked to headquarters have been installed in the back rooms of all the stores. (Surprising as it may sound, until 2009, headquarters sent messages to stores via postal mail.) The company introduced computerbased training programs to improve employees’ skills, as well as software for screening job candidates to identify which of them have qualities associated with success. And to reduce thefts in the stores, the company installed closedcircuit television systems.
Managers also have been given better technology. Dollar General bought district managers personal computers with software that monitors performance and flags exceptions to standards. It also gave them BlackBerry handheld devices so they can keep in touch with their people and keep up to date on store performance while they travel. The technology has enabled Dollar General to widen the district managers’
span of control because fewer managers can keep up with more stores. More efficient management, in turn, has supported the company’s program of rapidly opening new stores. (It now has more than 12,000 in 43 states.)
These efficiency improvements are essential for remaining successful in the changing deep-discount retailing industry.
Dollar General’s competitor Dollar Tree surprised industry observers by announcing that it would be purchasing Family Dollar for nearly $9 billion. This new entity (it’ll keep both brands) will be larger than Dollar General in both sales and number of stores. In response to the move, former Dollar General CEO Richard Dreiling postponed his retirement to help the retailer adjust to the new competitive landscape. As Dollar General tries to maintain profitability, it will keep looking for ways to change how it does business, and technology will continue to play a role in the solutions. So far, it’s a strategy that has fueled tremendous growth at Dollar General even as other retailers are struggling to maintain sales volume.
QUESTIONS 1. What types of control are important at Dollar General?
Why are these important?
2. What technological innovations did Kathleen Guion introduce at Dollar General? How did these innovations support the company’s strategy?
3. What challenges would you have expected Guion to face in introducing these changes? What principles of managing change would you have suggested she apply?