In the last 12 months, Vancouver-based Dollar Giant has opened 17 stores. For 2009, Joseph Calvano, founder, president, and CEO, plans to open 10 more. With the world’s economy feeling shaky and companies looking to scale back rather than branch out, other retailers may be wondering how Calvano can make such decisions. It all comes back to his company’s simple business platform: no piece of merchandise in any of Dollar Giant’s 60-plus stores costs more than $1.00.
“Dollar Giant continues to be a single-price operator in all of its stores so customers have an easy shopping experience with true value,” Calvano said.
But Dollar Giant’s success goes beyond its simple price point. It also comes back to Calvano’s founding vision to provide his customers good value while also offering a wider selection of products than the company’s competitors. Calvano calls this “entire family shopping,” and by sticking to this founding vision, Dollar Giant will reach Calvano’s goal of hitting $100 million in revenue before his original target of 2010.
“We had a vision of what we wanted to bring to the consumer, what kind of growth we wanted to achieve, but also what we wanted to bring to our employees,” he said. “We’ve accomplished it all. Our employees have opportunities to grow from being a cashier to being a store manager or field merchandising manager and making a good, solid living and a good career.”
The majority of Dollar Giant’s stores are between 8,000 and 10,000 square feet, with one reaching 16,000 square feet, but that wasn’t always the case. When Calvano founded the company in 2001, his stores were between 2,000 and 3,000 square feet. As the company began to better understand its concept, the needs of its consumers, and the product selection that was available, it also began to realize that the store layouts needed to better reflect and highlight the merchandise.
“Our goal is to have a good presentation of product,” Calvano said. “We carry a strong selection of party favors, party treats, and balloons, but in overall assortment, we’re better than the competition and offer a wider assortment of goods.”
This strategy has also helped Dollar Giant reduce its marketing expenses. The company hasn’t invested a lot of capital into advertising as its value has primarily spread through word of mouth. And with tight margins due to its products’ price points, word of mouth is just fine for Calvano.
The company does some radio advertising and a minimal amount of paper advertising, but it also relies on placing new locations in high-traffic areas—pockets of large retail centers that have 100,000-plus populations. The company looks at the demographics of its locations, which are spread throughout Ontario, Saskatchewan, Alberta, and British Columbia, but it also looks for the biggest opportunities.
“If we open 10 stores, we want to pick the sites that will produce the best sales and growth for our cost,” Calvano said. “As long as it’s a destination center where the consumers go for other services, that traffic flow will come to our stores because we’re a single-price operator.”
For the past seven years, Calvano has worked with Dan Clark of Siting, a real estate firm, to review each site before building begins, analyzing the demographics and potentials. In the past few years, operating costs and rents have increased, so each new location must be carefully selected. These changes have also prompted Calvano to reduce new stores’ square footage
to between 8,000 and 9,000 square feet rather than reaching up to 10,000 square feet.
One thing that won’t change is the design, layout, and signage of Dollar Giant stores. “The yellow background and green lettering stands out to represent a good, clean operating store,” Calvano said. “People like that combination, and I think it’s
an attractive sign.”
Efficiency and integrity
For 2009, Calvano said he’s slowing down the pace of Dollar Giant’s growth to put a renewed focus on personnel, IT, and efficiency. Although store managers are trained by the company’s store opening team on how to do everything from ordering supplies to cleaning the floors, Calvano said there is more the company can do to make the store manager’s jobs more efficient.
At the top of the list is an investment in point-of-sale technology that would track specific SKUs being sold at each store to enhance their in-stock efficiencies. Currently, store managers physically order from a weekly list, but the process is time consuming. Calvano believes the new technology will make the store managers more efficient in getting their products out as well as making the company as a whole more efficient in keeping products in stock.
“We’ve developed many internal operating systems for 2009 and 2010, and we’ll be putting a lot of focus on better in-stock position and continuing to improve our selection of products,” Calvano said.
As with his real estate team, Calvano uses an outside company for Dollar Giant’s IT needs, and the company has been with Dollar Giant since day one. And just as with the vendors he chooses, Calvano picks his business partners based on their reliability, integrity, and honesty.
“We do not do business with vendors or our business partners strictly on price,” he said. “Obviously we look for best pricing, but without reliability and honesty and credibility in the product, whether for our customers or for ourselves, the partnership wouldn’t work.”