Dollar Stores - More Bang For Your Buck

Monday, September 01, 2003

Allied Systems Industries (ASI) is the nation's largest developer of independently-owned Dollar Stores and with over half of every U.S. household shopping at dollar stores, the future looks bright. Not a franchise, ASI Dollar Stores is offering business opportunities across the United States and internationally in some countries as well. Franchise Direct spoke to "Dollar" Dan Margles, the company's Vice President of Operations.

Dollar StoresDollar Stores are a convenience store concept selling thousands of items all priced at one dollar. ASI Dollar Stores carry best selling items in more than 50 major categories, with each store carrying between 3,000 and 10,000 items at any one time. Best selling categories include party supplies, toys, house wares, , health and beauty supplies, candles and gift items, fashion accessories cleaning supplies, snack foods and many more.

One of the few industries that actually thrives in a slow economy, dollar stores are increasingly popular with consumers. Dan Margles puts the popularity of Dollar Stores down to a number of different factors: "There is a huge selection of items all under one roof and with an ASI Dollar Store 30% of the merchandise is new each month. The customers can expect to find something new to buy every time they come into one of our stores.

"We are doing extremely well in the slow economy. Discount retail sales has been the fastest growing segment of the retail market in today's economy. More people are looking to save money on their budgets and are cutting back on expensive purchases, such as vacations, restaurant meals and designer clothes and are instead shopping for bargains" "Also, many corporate executives and middle managers continue to find themselves laid off in other fields where the economy has hurt their business. Many of these people are now looking to start their own business. Our Dollar Stores are a relatively low investment compared to owning most franchises, such as a restaurant . Our average customer this year is purchasing a complete turnkey store with high-end inventory and fixtures in the 3000 to 4000 square foot range for a total cost of only $149,000 to $199,000. As always, there are no franchise fees or ongoing royalties to pay.. Many operators are looking to open a second store within 12 to 18 months." Dollar StoresAllied System's ability to source such items at low prices is one of the key benefits that the company offers to its independent owners. All ASI Dollar Store owners receive free membership in their national buying group. They have access to around 200,000 different items at any one time. Since they are such a large buying group they are able to negotiate far better pricing and service than an independent storeowner would be able to. ASI uses only the industries very best suppliers when setting up new stores. They are also constantly adding new categories and suppliers and the quality of the merchandise is getting better and better each year as the industry becomes bigger and more competitive Allied Systems is the originator of the dollar store concept and opened its first Dollar Store in 1992. Eleven years later that Flagship store still operates in its Las Vegas, NV location and Allied Systems has just opened its 400th U.S. store. ASI is also looking for qualified investors for some international markets where the barriers to entry are low. Import duties and shipping costs make it impossible for foreign operators to run their business at the ONE DOLLAR (USD) price point. While this limits the prospect for International expansion there are some markets that the company will consider.

The majority of shoppers that use Dollar Stores are women but Dan points out that Dollar Stores are popular with shoppers from all walks of life. "We have stores in high economic areas with wealthy families, middle income, blue collar, white collar and lower income areas. Everybody likes a bargain so it appeals pretty much universally. Most of the items that we carry in our store you will find in more expensive retail stores selling for $3 or $5. We find that some items such as our candles , candleholders and glassware items, are priced as high as $15 or $20 each for the same item that we sell for $1." The stores can be put in just about any city with a population of 5,000 or more. They are customized to fit the area and can be anywhere between 1,000 sq ft of retail to 17,000 sq ft. The price for a turnkey store package ranges from $65,000 to $499,000 depending on the size. This investment includes everything from a carefully researched site, a fully stocked custom designed new store, owner training, and continuing marketing and operations help. "The owner literally has to show up on the day of the Grand Opening and turn the key".

"Because you don't have to think about the price the dollar store encourages a lot of impulse shopping and with over 3,000 items in each store, customers may go in for only one or two items and come out with 10 or 15." Dollar StoresProspective buyers go to Nevada to the Flagship store where they can take a tour of the store and get acquainted with the hands on day-to-day operation of the business. According to Mr. Margles, the dollar store is a very simple operation so anyone can learn how to operate a successful dollar store without previous retail experience .In addition to researching the location and setting up the store, ASI also provides onsite training. The trainer will go through set up of the merchandise, re-ordering process, how to track inventory, hiring of personnel and the other operational and marketing aspects of running the store. The company also provides an operations manual and a CD ROM as well as offering continuing support to its existing owners.

Because the operation of the business is so simple, no previous retail experience is necessary. Allied Systems Dollar Stores are looking for anyone that has the dedication and the desire to own their own business with the support of an established and market leading company. ASI Dollar Stores are not a franchise so there is no monthly royalty fee. Mr. Margles points out that you get all the benefits of a franchise without the typical restrictions and red tape. And because there is no monthly royalties, all of the money made from the store is yours to keep. The initial investment is the only fee and the storeowner reaps the benefits of preferred pricing and service from the national buying group. This process makes it much easier for the storeowner than buying merchandise on their own.. "We have 400 stores so suppliers want to give us their very pricing and their best selling merchandise. Suppliers typically take care of their biggest accounts first so that's another key advantage for the storeowner." The Dollar Stores opportunity also offers considerable flexibility. There is no required merchandise so the storeowner has the flexibility to choose various different lines and different suppliers. The owner is free to customize his store and tailor his inventory to meet the demands of their own customers. Also, while each store will be designed with a similar internal layout, the storeowner is free to choose the name under which they want to operate and owns the business fully and without restrictions.

Financing is available through local banks and also sources such as the SBA. Allied Systems has support staff that will help package loans and present them to the various lending institutions to aid the storeowner in finding the financial support they need to get started.

We asked Dollar Dan what differentiates Dollar Stores from the thousands of other opportunities that are out there and this is what he had to say: "Dollar Stores have universal appeal. Everybody loves a bargain and these are basically bargain stores. Often with a franchise you get very specialized and you only appeal to a small market segment of our population. The Dollar Stores carry so many different items that they appeal to everybody. The cost to get in is also much lower than a typical franchise. You can be up and running for as little as $65k. Its also a very easy, simple operation with no accounts receivable, warehousing, extensive employees or high overhead It is pretty much a matter of cash and carry.

"In short, it has universal appeal, it's a lower cost opportunity and it's very simple to run."

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4560 S. Decature, Suite 302
Las Vegas, NV

Phone: (702) 891-8780
Toll Free: (800) 365-9099
Fax: (702) 891-8778

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