Dollars, deals, deception


December 11, 2018

As dollar stores continue to move in, their low-income market is finding they’re not as much of a steal as the packaging advertises.
The Hustle Sponsored by Highfive Inc
The Hustle Daily Email

Blue Collar General: For low-income towns, dollar stores are a surprisingly bad deal

Dollar General became the fastest growing retailer in the US by catering to low-income consumers with no other options. Now, Dollar General and Dollar Tree are expected to have 50k stores in the next few years — roughly 10x as many as Walmart

But, dollar stores can be a discounted devil in disguise: Dollar store “deals” are often more expensive than bulk-bought alternatives due to deceptive packaging, and they often leave consumers with fewer options by driving local stores out of business.

Where rural America goes to spend its bottom dollar

Dollar General built its discount dynasty in communities where even Walmart couldn’t turn a profit, something former CEO David Perdue (and current US senator) summed up simply: “We went where they ain’t.”

Box stores like Walmart cost millions to open, but Dollar General can open a store the size of a basketball court for $250k — and turn a profit even in low-income communities with just 1k homes.

Today, 75% of Dollar General’s 15k stores are in towns with fewer than 20k people (and more than 15 miles from a Walmart). Most of Dollar General’s customers have household incomes of less than $40k.

The profit is in the packaging

Astonishingly, Dollar General has posted 28 straight years of same-store sales growth by serving as the lucrative last resort to America’s “permanent underclass.” 

But, while customers pay less at dollar stores, they also get less: 16-oz milk cartons for $1 seem like a good alternative to a $3.50 gallon — but they equal an $8 gallon when priced per ounce (talk about getting milked).

Death by discount

In communities with no retailers, dollar stores can spare consumers a journey. But in small local economies, dollar stores choke out local competitors, causing 40% sales declines that kill off mom-and-pop stores.

Local newspapers from North Dakota to Vermont to Minnesota have criticized dollar stores for killing of local businesses and reducing local jobs (Dollar Generals often employ just 1-2 employees).

But Dollar General can’t see the haters: with 31% profit margins, the chain posts less revenue than Macys — but twice the profit. 

HT: When your business model starts making Walmart look like a community organization, I say it’s time to take a good long look in the mirror.

Dirty discounts
Share on Facebook Share on LinkedIn Share on Twitter View in Browser
 

On the eve of its IPO, Uber unveils a bold, brilliant new business: burrito bundling

Uber revealed plans to build a new advertising system into its UberEats platform, according to TechCrunch. The revamped food delivery service will now allow restaurants to strategically boost sales of their Eats — for a price.

Uber confidentially filed for an IPO last week, and this new new ad-based product launch promises investors a tasty new revenue stream.  

Your burger will now ride with a buddy

Here’s how it works: Uber posts promotional discounts in the UberEats app, offering discounts like “$2 off your order, Share a courier with a nearby order” to drive demand for particular restaurants.

Uber now pools food orders the same way it pools passengers, enabling a wide variety of powerful advertising tools. 

Uber will first offer restaurants rankings boosts in exchange for discounts. But Uber could also use what it calls its “logistics expertise” to sell restaurants data to target new customers, predict demand spikes, and boost rankings.

‘Valuation is higher due to increased demand’

It’s a complicated system, but it provides a straightforward takeaway: Uber has another new way to make money. 

Plus, since the business model is based on advertising, this new revenue stream could quickly grow into a revenue river.

Uber’s untapped advertising business will whet IPO investors’ appetites, positioning the company at the high end of its $75B to $120B valuation range.

   @ Me Anything
Lindsey Quinn, Managing Editor at The hustle
@LimbsySquid

A network of restaurants, reviews, with ad-based promotions, and a vertically integrated delivery service? Yelp has gotta be sweating like a rotisserie chicken right now…
Show this thread
» A bundle of joy

10.4k Verizon employees took the company’s ‘voluntary separation’ offer

Verizon announced yesterday that over 10.4k employees took buyouts to leave the company — that’s almost 7% of the company’s worldwide workforce.

We can’t blame them: The offer included up to 60 weeks of salary, bonus and benefits (depending on the employee’s tenure).

In other words, the perfect deal for a Verizon employee who has long wanted to quit it all, live in a van, and become a travel influencer.

“I didn’t get fired, Mom…”

The “voluntary separation” offer has been on the table since September, in hopes of reducing headcount to save $10B by 2021.

Bob Varettoni, Verizon’s corporate director of communications, told us the deal was offered to 44k employees (primarily US-based management employees); of those, 11.4k employees volunteered — 90% of which were accepted.

The droves of employees who took the buyout could indicate that — with the US unemployment rate at a 49-year low — people are feeling confident about collecting that tickle and taking their chances on the job market.

All about that 5G

The offer is reportedly part of an effort to trim the telecom giant’s workforce ahead of its push toward 5G. 

The race is red hot as many private companies are taking it upon themselves to get 5G early, but for the rest of us, carriers like AT&T and Verizon don’t expect the eagle to fully land until 2020.

» Can you friggin’ hear me now??

Tivity Health will acquire Nutrisystem for a hefty sum of $1.4B

Tivity Health is buying weight management company Nutrisystem in a cash and stock deal the companies value at an obese $1.4B.

The Tennessee-based Tivity expects to maintain Nutrisystem, and its Pennsylvania location, as well as its other brands that include the South Beach Diet..

Crossfit for seniors

Tivity is the parent of fitness program SilverSneakers (workout classes that focus on customers age 50 and older), and now the company hopes to make gains by helping people manage their weight.

For the year ending Sept. 30, Tivity pumped out $593m in revenue, and ended with a market value of $1.6B. 

But, that all changed after the handshake. The fitness conglomerate lost about a third of its market value as investors reportedly balked at the deal, which was designed to give Tivity shareholders an 87% stake in the combined company.

What’s up investors’ (flat) butts?

Nutrisystem has fallen 35% this year and, according to Bloomberg, went “ex-dividend” last month — so there’s that.

Plus, Investors have reportedly stated concern over how Tivity will work Nutrisystem into its system.

Though, Axios reports Tivity may see an opening to include Nutrisystem in its Medicare Advantage plan as SilverSneakers classes are often an added benefit. 

» Grandma’s psyched for bulking season
SPONSORED

Do your meeting rooms need a royal upgrade?

We sure hope so, because our friends at Highfive are itching to give you one. 

All you have to do to enter their $10,000 Meeting Room Makeover contest is pop over to the Highfive site and tell them why you deserve a room fit for foreign royalty. 

It only takes 3 minutes to enter, and just think of all the positive things a new conference room can give you…

  • Hear the sweet sounds of client accolades in crisp Dolby surround sound.
  • See the smiling faces of your team on two 4k 45″ Samsung flatscreens as you close a 6-figure deal
  • Wire-frame every landing page you’ve ever dreamed about on a new magnetic glass whiteboard

Get more from your meetings with Highfive

They’re running this contest because they want to make everything about video conferencing better. And they do a great job of it, believe us — we love Highfive

Their integrated software and hardware keeps our spread-out team in touch, no matter where our travels take us. No app downloads or annoying pin codes, just instant video conferencing. Click a link and you’re in, plain and simple.

Oh, did we mention they’ll throw in 50 licenses for Highfive to boot? What are you waiting for — that room ain’t gonna renovate itself. 

Upgrade that office →
SPONSORED
exclusive giveaway

“If people think you suck, shouldn’t you know?”

That’s what the folks at .SUCKS said to us. And we gotta admit, they’re right. So, they set us up with thehustle.sucks to give our haters a direct line to HQ.

What’d we learn? Positive feedback is a digital pat on the back, but genuine negative feedback? That’s like a diamond in a troll mine.

That’s why .SUCKS domains are so great. They strip away all the HR pleasantries and give people a forum to tell it like it is… and boy, do they. Here’s just a taste of what some of you had to say about us:

Feedback makes a business better. Period. If your readers customers have a negative experience, they’ll want to share it — and if you’re smart, you’ll give them an outlet.

Now, .SUCKS is giving any business (or person) the chance to learn what others really think about them with their own .SUCKS domain — presenting the #TellUsWhatSucks giveaway.

Entry is simple: You have until Jan 14th to tell them 1) what sucks and 2) what you plan to do about it.

It can be a business opportunity, creative marketing idea, feedback forum, or just a place to gather with other like-minded skeptics (kale.sucks, anyone?). The winner gets a free .SUCKS domain and hosting for a year (valued at $3000).

May the worst ideas win.

#TellUsWhatSucks →
Now Playing Now Playing:
Geezer Love, Spencer Tweedy. Sounds like his dad, Jeff — but not too much. Just enough.
[%Count%] SHARE THE HUSTLE
REFERRALS
[%URL%]
YOUR UNIQUE URL
Zack Crockett
Zack Crockett
NEWS WRITER
Wes Schlagenhauf
Wes Schlagenhauf
NEWS WRITER
Conor Grant
Conor Grant
NEWS WRITER
Kolby Hatch
Kolby Hatch
AD WRITER
Lindsey “SilverSneakers is my sanctuary” Quinn
MANAGING EDITOR
Eustace Hammer
Laptop Repair Technician
SUBSCRIBE JOBS ADVERTISE EVENTS SHOP
Facebook Instagram YouTube
Join our Instagram community →
You opted in by signing up, attending an event, or through divine intervention. 771 CLEMENTINA STREET, SAN FRANCISCO, CA 94103, UNITED STATES415.506.7210 Never want to hear from us again? Break our hearts and unsubscribe
The Hustle

Daily briefings, straight to your inbox

Business and tech news in 5 minutes or less

Join over 1 million people who read The Hustle

Psst

How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

Data shows where markets are headed.

And that’s why we built Trends — to show you up-and-coming market opportunities about to explode. Interested?

Join us, it's free.

Look, you came to this site because you saw something cool. But here’s the deal. This site is actually a daily email that covers the important news in business, tech, and culture.

So, if you like what you’re reading, give the email a try.