My recommendation: 09/10
Summary of notes and ideas
I reckon that success rides on attitude and a certain amount of intelligence, but the biggest ingredient by far has to be desire. That’s what fuels drive: wanting something badly and being willing to do the work to get it.
Kids now are quickly bored—and part of the reason, I’m sure, is that they’re not called on to tap into their mind’s eye. I see it with my own grandkids. I buy them an elaborate game covered in buttons and flashing lights, capable of making all kinds of sound effects, and they’re done with it in ten minutes. They push the buttons and see what it does, and they’ve run its course.
And here’s an even more remarkable fact: most of our stores did far better than simply pay for themselves in their first year. Some earned enough to damn near pay for a second store. Next to the toy business, the speed with which the dollar venture became profitable bordered on scary. The numbers weren’t as impressive at first glance, because we weren’t selling twenty-dollar stuffed animals and forty-dollar video-game cartridges. A toy store’s annual income was going to be higher. But we were spending fifty or sixty cents on the merchandise we sold for a dollar, and our operating costs were rock-bottom, so the net was impressive on the modest gross income produced by a dollar store.
Ditch the dollar, I believed, and we’d surrender our niche. We’d also damage our negotiating position with the very vendors who were bitching about our price point, because as things stood they knew what price they had to meet before we would or could buy from them. They knew we had no wiggle room. Take away that hard ceiling on any conversation about the price of their products and I was sure their products would suddenly get more expensive. The dollar price point helped us negotiate low rents, too. Prospective landlords knew we could pay only so much, because we sold everything for a dollar. It was clear to everyone on both sides of the negotiating table that we had real limits on what we could afford.
So on our foreign ventures, I took a higher margin—in the 55 to 60 percent range—to balance things out. That way, the mix of domestic and foreign purchases fell within a certain markup range we established through careful planning. When I went overseas, I had a rough “open-to-buy” target we’d aim for—so many millions of dollars available to spend for x type of items at such-and-such a margin. The margin might vary slightly from category to category. I might aim for a 50 percent margin on toys, for example, and 60 percent on housewares. I could overspend or underspend my budget depending on what I found; it was a general direction, rather than some holy, inviolable number. It wasn’t like I had a boss looking over my shoulder, so our buying was flexible. We could take advantage of unexpected windfalls, great deals.
Dollar Tree could not have prospered without Doug’s expertise in getting us good locations for our stores. Many a good concept has failed because it opened for business in the wrong place. Real estate has always been a vital component of our success. But what most excited our new partners was what we chose to sell in the stores and our ability to stick with our price point regardless of what was happening in the world. In their view, that’s what made us truly remarkable and set us apart from any other retailer in the country.
We’d always placed high value on playing by a few simple rules: being honest, being straight, paying our bills, and treating people well.
In the meantime, Zeb Holt introduced me to a hiring process he’d been exposed to at the bank—a battery of interviews and tests administered by an industrial psychologist named Keith Jacoby and designed to analyze a job candidate’s skills, aptitudes, and fit in an organization. I figured that before we put any candidates through the regimen, we ought to submit to it ourselves, to find out who we were—or rather, to find out if we were who we thought we were. I asked all of our top men and women to take part in the analysis.
…reviewing the crazy growth of Dollar Tree through the end of 2003, to dismiss it all as the product of underselling the competition, to say we achieved success simply because our products were so inexpensive. But that’s not the way I look at Dollar Tree. I never have. Our success has always seemed to me the result of trying to do the right thing for the right reason.
We could have looked after our own people poorly, could have paid our sales associates and warehouse teams the minimum, without benefits, and not bothered with performance bonuses and investment options. But we didn’t do that. We can’t pay them as much as they’re worth to us—because if we did, we’d have gone bankrupt long ago, considering how high a regard we have for them—but we pay them decently and always try to treat them fairly. We train our managers to “catch people doing something right”—to praise them, encourage them, show them how important they are to the company’s success.
It’s pretty easy to see such patterns in those close to me on this adventure, too. In K. R., I see a life informed by an independent streak, quiet and disciplined planning, and educated risk taking. Doug Perry’s tendency toward modesty was as obvious when he was Dollar Tree’s chairman as when he was buffing the floor at the dime store, and his friendliness and empathy for people endeared him to thousands within the company—and made him a disarmingly effective negotiator to boot. Ray Compton’s attention to detail and careful methodology not only contributed to his success as an accountant and financial planner, it made him the calm, rock-steady center of Dollar Tree’s sometimes cyclonic corporate atmosphere
First, nobody achieves anything worthwhile on his own. We need each other. The whole is almost always greater than the sum of its parts. And second, it pays to have a mission. In our case, we aimed to surprise and delight our customers, to do right by them. To make their
We could have set out simply to make a lot of money, and perhaps we would have. But had that been our sole mission, I don’t believe we’d feel nearly as good about the experience as we do. Talk to Dollar Tree’s old-timers and you’ll detect an almost spiritual kinship to the company and the people they worked with—and a sense that we were up to something good. I like to think that whatever the future holds for Dollar Tree, that focus will remain in place. That we’ll always strive to surprise and delight our customers. That we’ll consider it necessary to treat people fairly. That we’ll keep our egos out of the business. We’ve never let them get in the way before. Why would we?
Please consider buying One Buck at a Time: An Insider’s Account of How Dollar Tree Remade American Retail.