The value of a dollar

The value of a dollar changes constantly, but for single-price dollar stores, holding onto that fixed price means retaining their very essence.

For Arlene Swindell, working at Dollar Tree for more than five years gave her the confidence to start a business that made her feel like every day could be a holiday.

“It’s like Christmas, when you open packages,” she said.

Swindell opened Show-Me Dollar in Columbia in August, but she didn’t realize the success she witnessed while working at the Dollar Tree would be so difficult to obtain on her own.

Unlike other discount stores, one-price dollar stores face a greater challenge of keeping the dollar value on all items while remaining profitable.

For Swindell, pricing items such as brooms and mops at a dollar sometimes means losing money or not earning a profit.

“The price of merchandise has gone up, and the freight adds 10 percent or 20 percent to everything you’re paying 65 cents for,” she said.

The cost of freight is often determined by calculating product weight and distance, but the price of gas and other economic factors also affect rates.

For Brian Gardner, owner of Dollarville in Boonville since May 2005, the business remains profitable. Still, the cost of shipping has become a burdensome expense. Since about eight months ago, Gardner sometimes pays nearly double what he used to pay for shipping, he said.

“I’ve stayed profitable, but profit margins are getting very slim,” he said. “The price of shipping has become astronomical.”

In addition to higher freight costs, increasing gas prices have affected the price of petroleum-based goods such as plastic, said Bill Lipshin, account executive with STK International, a merchandise supplier for discount stores.

To avoid passing their loss on to customers, both Swindell and Gardner said they are looking for new ways to stock their store shelves.

Arthur Rosenberg, senior editor for Chain Store Guide, said some dollar stores sell items as smaller packages, find new sellers, or compromise the quality of their goods to continue selling at the one-price level.

Gardner said he does not compromise the quality of his goods, but shops carefully for the items he’ll sell.

Swindell has become a more careful buyer as well. She said she recently attended a trade show in Las Vegas to find vendors who could work with a small store. She usually buys from vendors who require a $1,000 minimum, even though she sometimes needs only four or five items.

“That’s what’s hurting me so much,” she said. “I’m not big enough.”

Rosenberg said some analysts have questioned the long-term viability of single-price stores dependent on goods from China, which is where the majority of exported dollar-store merchandise is manufactured.

“That’s one of the concerns, that China’s currency is undervalued and if they ever value it correctly, the feeling is that it will hurt China and hurt dollar stores to some degree,” he said.

More than 90 percent of the items from Show-Me Dollar come from China, Swindell said.

Most Dollarville plastic goods come from China, Gardner said, but most of his paper and party goods are from the United States.

When Dollar Tree Corp. bought Deals in Columbia as part of a purchase of 138 Deals stores from the Save-A-Lot Corp. a year ago, its pricing changed from the dollar-only value to a dollar or more. Spokeswoman Shelly Galiano said about 80 percent of the goods are still at the fixed dollar price.

“This is our foray into multipricing,” Galiano said. “We’d like to see what we like about it and what we don’t like about it.”

While Galiano said she views this as part of an experiment, Swindell said she thinks it might be an inevitable future.

“I think there’s going to be a time when one-price dollar stores don’t exist,” Swindell said.

Lipshin projects a different future for dollar stores.

“I believe in the next few years through alternative fuels, we will be able to go back to one-price dollar stores.”