This multi-state dollar store chain is thriving in a challenging economy by providing its customers with more for less. This multi-state dollar store chain is thriving in a challenging economy by providing its customers with more for less.
Many dollar stores are struggling even though people are looking to save. But for New York-based Just-A-Buck, growth and profitability continues because of its merchandise mix and commitment to service.
“It is important that our customers get a good value for a dollar,” said Steven Bakst, president.
Founded by Bakst and his sister, Rochelle, Just-A-Buck’s headquarters is in New Windsor, NY, roughly 20 miles from where the first Just-A-Buck opened in Poughkeepsie in 1988. In 1992, the company brought in Robert Capone as a third partner and began franchising stores. It has grown to 33 total franchise and company-owned stores in 10 states.
In the beginning, dollar stores were no-frills operations. Although merchandise was high quality and customer service was never secondary, the first Just-A-Buck stores displayed items in bins with tight aisles, squeezing as much merchandise on the floor as possible. Today, all Just-A-Buck stores are well lit, have prominently displayed merchandise with no bins, and have spacious aisles to make the shopping experience more comfortable.
“It used to be easy to open a dollar store. You didn’t have to display things well and people would buy. Now you have to be perfect on every part of the business from the inventory mix to displays and customer service. Everything has to be right, so we are always looking for new and innovative ways to display merchandise better,” said Bakst.
This is vital, because in today’s economy more people are flocking to Just-A-Buck stores. Moreover, regular shoppers are returning more often and spending more. It is critical for Just-A-Buck to do whatever it can to keep these people coming in, even after the economic cycle starts heading north.
“It is important the person at the register communicates with customers regularly, especially those that shop us several times a week,” Bakst said. “That feedback comes up the chain of command so we can tailor the merchandise based on consumer needs.”
To help both its company stores and franchisees, Just-A-Buck runs an internal training program called Buck University that teaches everything involved with running a dollar store. Just-A-Buck is different than a big box outlet; it doesn’t warehouse merchandise or have its own fleet of trucks. The company is squarely focused on retail sales, and given the low price point and fluctuating merchandise, managers and franchise owners need to know exactly how to train their people on how to get feedback from customers and use that information to consistently shape the stores based on changing expectations.
Right now, Just-A-Buck is looking to expand both company stores and franchise operations. It isn’t necessarily interested in becoming the largest dollar store chain, but it does want to be considered as the best. Overexpansion could hurt the brand in the long run. Therefore, careful growth based on market demographics is central to the company’s growth strategy.
With roughly 80% of the stores now franchise-owned, it is clear the company’s franchisee program is vital to the future of the brand. It isn't necessarily important that incoming franchisees have previous retail experience. Just-A-Buck puts them through the four-week training program and teaches them on the fundamentals of running dollar stores and using the company’s proprietary software system. The software is different than a POS system used by other retail stores and Bakst credits it with improving the efficiency of inventory flow.
“POS system’s will show one store sold, for example, 600 flashlights last week and automatically reorder them, but it doesn’t tell you what the store owner or manager would realize, that last week there was a hurricane warning so there was a run on flashlights,” said Bakst. “We take things like that into consideration on a manager and store owner level. They are much more involved in the reorder process to give the customers what they need while taking the bigger picture into consideration.”
Franchisees don’t have to worry about sourcing goods as Just-A-Buck’s corporate headquarters purchases inventory for its franchisees. All the franchisees have to do is display merchandise and manage day-to-day operations. Company stores are used as test locations for new product lines and display techniques, which are offered to franchise stores when found to be successful. District managers visit franchise stores regularly so each store has a similar look and feel. The company’s Web site is also geared toward franchisees. Although it allows consumers to learn more about the brand and find locations, online shopping isn’t currently a viable option for dollar stores because shipping costs more than merchandise. Instead, the site has an intranet store owners and managers can log on to, communicating with other stores to share best practices on display techniques and merchandise sales.
Although some vendor relationships go back to Just-A-Buck’s early days, the volatile nature of things like changing customer demands and inflation mean the company always needs an eye open for new avenues for sourcing goods. Its product lines must change with the times, a lesson Just-A-Buck learned early on.
“When we opened the first store, a lot of people in Poughkeepsie worked for IBM. When IBM had massive layoffs, people had less disposable income so sales declined. Once we changed the product mix to consumables, sales shot back up again,” said Bakst. “We change to fill voids wherever they may be, like with Linens-N-Things going out of business, we are looking for those types of products.”
As the company continues its growth, Just-A-Buck is embracing sustainable business practices such as selling reusable heavy-duty shopping bags, shying away from large cardboard displays, installing lighting ballasts that use less power, and putting in longer-lasting, energy efficient light bulbs. These initiatives will not only help the company in terms of sustainability, but it will also appeal to consumers that share a similar mindset.
Despite the economic uncertainty of these challenging times, Just-A-Buck is still experiencing controlled, steady growth. As long as the company continues to offer quality merchandise and superior value and service, that growth trend is unlikely to end anytime soon.
“This is an exciting time for us because the economic situation means everyone is trying to save money. If our stores are run well and have the right merchandise blend, we will continue to succeed,” concluded Bakst.