Competition in another form

They have added extensive sections of a wide variety of products selling for just one dollar, emulating the success of dollar stores themselves. Such stores seem to fascinate and attract American consumers: even middle-income and well-to-do customers shop there regularly.
Those independent hardware and home centre retailers now stocking dollar-priced items find these sections definitely help improve store traffic from the dismal numbers common to their trade. Now, some dealers report, customers often come to the store as frequently as every couple of weeks to “see what’s new.” That’s far different from the industry average of about 4-6 visits a year.
Stocking dollar merchandise is also a strategy employed as a countermeasure to the opening of a big-box chain home centre nearby, or of a mass-merchant store such as Wal-Mart or Target. Dollar items help convey an image of being competitively priced against the retailing giants.
Where are such items being displayed in hardlines stores? Wherever space is available. Some stores find seasonal areas not being utilized to maximum advantage and convert this area to dollar items. Others devote a series of gondola end caps to dollar items. Successful merchants are agreed that one must devote enough space to have a strong visual impact in the store, however, and that space must be located where customers can find it.
What kinds of items are being stocked? Many are consumables, which generate repeat visits. Items such as laundry and dish detergents, paper towels, tissues, shampoos and window-cleaning products, etc. Also candy and some other impulse-type food items. But most include low-cost tools and hardware items, plus things like cheap paintbrushes and electronic accessories, etc. The range is almost limitless.
What’s important is to keep one’s inventory fresh, dealers say, by adding new items and deleting some of the slower movers on a regular basis. By selectively adjusting some prices, retailers say they can maintain the bargain image while still improving overall margins.
In the United States, there are a number of specialist distributors providing extensive arrays of dollar merchandise. In addition, some conventional hardware distributors are now offering more limited assortments of these items at their spring and fall buying markets, recognizing that their customers need some different merchandising appeals in order to succeed in the marketplace.
A large, locally-owned store which has made quite a success of its dollar items is Jed’s Ace Home Center, located in Houston, Texas, and less than three miles from a mammoth Home Depot.
Its dollar department is aggressively signed and helps drive traffic towards the rear of the store, exposing other merchandise to consumers as they head for the bargain counters and walk past gondola end caps.
This strategy seems to be working for many retailers, especially in increasing store traffic and impulse sales.