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Top Dollar

The lure of the "less than a buck" stores

As lagging sales plague many retail sectors, the smart money's on dollar stores. Retail Forward (, a retail management firm in Columbus, Ohio, reports that dollar store sales were up nearly 7 percent in 2002.

Retail industry consultant Sue Goldstein in Dallas says smaller retailers can boost their bottom lines by adding the dollar store concept into their own stores. "Some may use [dollar items] as a loss leader to draw people into the store, but sample shops, discontinued lines and closeouts all offer opportunities to buy merchandise that can be sold at a deep discount," she suggests.

Now, that doesn't mean you should just throw some cheap items on a shelf. Goldstein advises a more strategic approach:

Group your dollar offerings in one section of your store. "If you can't dedicate a section, come up with a theme-like everything in red baskets is a dollar," Goldstein says. "You need to set the merchandise apart somehow."

The dollar products you feature should be a natural extension of your existing product mix. If you sell costume jewelry, for example, your dollar items should be cheaper costume jewelry.

Customers should easily see that the dollar products are worth more than their price."That's why dollar stores are successful," Goldstein explains. "Customers know that the product is $4 or $6 somewhere else."

This story appears in the January 2004 issue of Entrepreneur. Subscribe »