A variety store (also five and dime (historic), pound shop, or dollar store) is a retail store that sells general merchandise, such as apparel, automotive parts, dry goods, hardware, home furnishings, and a selection of groceries. It usually sells them at discounted prices, sometimes at one or several fixed price points, such as one dollar, or historically, five and ten cents. Variety stores do not include larger formats: general merchandise superstores (hypermarkets) such as Target and Walmart. Warehouse clubs like Costco, grocery stores, and department stores are also not considered variety stores.
The common term in North America for a small general merchandise store is general store.
Five and dime stores
Frank Winfield Woolworth had seen the success in Michigan and western New York of so-called nickel stores, where everything cost five cents (the U.S. five cent coin is called a "nickel"). On February 22, 1879, Woolworth opened his Great Five Cent Store in Utica, New York, and it was his later success and expansion of that format as the F. W. Woolworth Company that would create the American institution of the five and ten cent store (or just five and ten), five and dime, or dime store (a dime is the name of a US ten-cent coin). Before Woolworth, the prevailing thought was an entire store could not maintain itself with all low-priced goods, but with Woolworth's success, many others followed their lead.
Well-known dime store companies included:
With suburbanization in the 1950s and 1960s, Americans shopped more and more in malls rather than downtown shopping districts, and Newberry's and Woolworth's stores did open in the malls but even so, starting around the 1970s, variety stores lost business to other retail formats such as office stores, low-price shoe chains, fabric stores, toy stores and discount drug stores like Thrifty Drug Stores. Grocery stores and drug stores sold more and more candy. The last US Woolworth's closed in 1997. Newberry's went bankrupt in 1992 and the brand disappeared in 2002. 300 McCrory stores, many of which being[clarification needed] Newberry's, closed in 1997.
Starting in the late 1990s, dollar stores had started expanding enough to gain the attention of the national press. They were popular not only due to their value, but because freestanding smaller stores were located in small towns, downtowns, and across the cities and suburbs, they were often convenient compared to going to the mall. They continued to grow and by 2019, for example, Dollar Tree had higher annual sales than Macy's. Dollar and variety store revenue reached $77 billion in 2018.
As of 2018, main dollar store chains in the U.S. were Dollar General, Dollar Tree (which owns Family Dollar), the 99 Cents Only Stores, and Five Below. Dollar stores are experiencing an increase of revenue, with around 14,000 Dollar Tree locations in the U.S. in 2018 with plans to open over a hundred more; 15,000 Dollar General locations with plans for 975 more in 2019; and Five Below with 745 stores.
Woolworth's opened its first store in the United Kingdom in 1909, when they were also colloquially known as "threepenny and sixpenny" stores, "3d and 6d" being displayed on the shops' frontages.
Miniso is a Chinese variety store chain that specializes in household and consumer goods including cosmetics, stationery, toys, and kitchenware. In 2016, the company's sales revenue reached $1.5 billion. Miniso has expanded outside of the Chinese market and operates 1,800 stores in Asia, Europe, Oceania, Africa, North America, and South America.
Pricing and margins
Some items are offered at a considerable discount over other retailers, whereas others are at much the same price point. There are two ways variety stores make a profit:
- Buying and selling huge amounts of goods at heavily discounted prices provides a small profit margin that is multiplied by the volume of sales.
- Pricing many items at prices that are higher than regular retailers. These goods are commonly bought by consumers who perceive them to be bargains based on the heavy discounts on other items in the store. In the case of fixed price-point retailers, this can be achieved by reducing the size of the package.
Variety stores with single price points buy products to fit those price points (while making a profit) that are:
- generic brands or private labels, often specially manufactured using cheaper materials and processes than usual.
- available through the grey market.
- bought at a closeout sale, such as seasonal or promotional goods or bankruptcy stock.
- sold in smaller unit sizes than elsewhere.
Not all variety stores are "single price-point" stores, even if their names imply it. For example, in the United States, Dollar General and Family Dollar sell items at more or less than a dollar. Some stores also sell goods priced at multiples of the named price and, conversely, multiple items for the price. The discrepancy with the nominal price is also compounded if sales tax is added at the point of sale.
In many countries, stock can be imported from others with lower variable costs, because of differences in wages, resource costs or taxation. Usually goods are imported by a general importer, then sold to the stores wholesale.[disputed ]
Another source of stock is overruns, surplus items and out-of-date food products. Real Deals, a regional dollar store in the Syracuse, New York area, is stocked almost entirely with surplus goods such as these. The legality of selling out-of-date goods varies between jurisdictions: in general, most items (with a few exceptions, particularly certain perishable food items depending on the state) can be sold in the United States regardless of their sell-by date, but in the United Kingdom it is illegal to sell goods after their "Use By" date.
Although some people[who?] may link variety stores with low-income areas, this is not always true. For example, Atherton, California has a variety store within its city limits, even though it has a median household income of nearly $185,000 a year. Studies of food discounters in Great Britain show quite a varied demographic, and 99p Stores reported an increase in higher-income customers after the financial crisis of 2007–2008.
Around the world
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