Bargain stores find dollar plenty strong

LAKEWOOD, Pierce County — How could she not beam?

Arlene Woodring was watching yet another customer load up a shopping cart at the giant Dollar Store not far from McChord Air Force Base: a buck for some Italian dressing, a buck for reading glasses, a buck for a can of Vienna sausages, a buck for a pair of socks, a buck for six bottles of True Alaskan Water.

Woodring and her husband, Gary Woodring, know first-hand we've become a dollar world, both to shoppers stretching their incomes and to those who don't need to budget but can't pass up a bargain.

Want a package with seven peanut-butter-filled chocolate bunnies? "Yes! Yes! Yes! I'm only $1" proclaimed a sign. What about a $1 DVD? Sure, it might be something obscure, say, "Beneath the Twelve Mile Reef," a 1953 Robert Wagner vehicle, but, according to the DVD box, "it's the first movie to shoot underwater scenes in Cinemascope!"

"Do you know what the funnest part is? Here at Christmas time," said Arlene Woodring. "I had someone with tears in their eyes, saying, 'Thanks to you, we're going to have a wonderful Christmas.' "

Last year, the Woodrings' 38 Dollar Stores in this state sold more than $40 million of goods, according to Gary Woodring, and business is going so well that they're building a 350,000-square-foot distribution center in Puyallup, double the size of their one in Auburn.

Just as their operation is doing well, so, too, is the dollar-store industry nationwide.

According to Retail Forward, a Columbus, Ohio, consulting firm, national chains in 2003 had more than 15,000 outlets, with 8,000 more projected to open by 2008. The industry considers dollar stores to be those selling everything for a dollar or less, or those that have $1 items as well as goods costing more, though generally under $10.

The two biggest chains — Dollar General, with more than 7,300 stores, and Family Dollar, with more than 5,500 — began in the South and have expanded westward but not yet to this state. In the Northwest, the Virginia-based Dollar Tree chain has 116 stores in Washington, Oregon and Idaho, and 2,700 nationwide.

The no-frills stores are "seemingly able to undercut" big discounters such as Wal-Mart because of several factors, according to the consulting firm: Outlets typically are on a main arterial, with easy parking, and tend to be small and relatively easy to navigate.

No 40-hour week

Arlene Woodring said owners must be willing to put in long hours. The couple, who opened their first Dollar Store in 1992 in Tacoma, work 60-hour weeks.

Previously, the Woodrings ran liquidation stores that sold close-out merchandise. Much of their suppliers' products were going to dollar stores, and the couple — he's 67, she's 65 — decided to try their hand at the business. They now have around 600 employees.

"We fill a need," Gary Woodring said. "Look around. Where else can you buy this assortment?"

It's a competitive industry, with local chains like the Woodrings' using industry contacts they've made over the years.

From one such contact, the Woodrings bought a truckload of Kroger pineapple juice for 81 cents or 82 cents per large can. "It was probably overproduction," said Arlene Woodring.

The couple were also selling Garden Goodness salad dressing. It's made by E.D. Smith USA of Pennsylvania, which bills itself as "the premier producer of private label pourable dressings, marinades and sauces equivalent to the leading national brands." E.D. Smith also sells to grocery chains.

The way Bill Lewis, E.D. Smith's general manager, sees it, the recipes for dressing are not exactly state secrets.

"Soybean oil is soybean oil. Vinegar is vinegar. Then it's a matter of putting a nice package together," Lewis said. "I ask myself all the time why people pay $3 for a bottle of salad dressing."

Arlene Woodring said she buys 90 percent of her inventory from suppliers like E.D. Smith, getting a truckload — 25,000 to 30,000 bottles — of Garden Goodness products every 60 days, with the rest of her inventory being overstock or closeout items.

For individual stores that don't have the money to buy in such large quantities, there are numerous wholesalers of dollar items, and firms that for a fee will completely outfit a new store — providing fixtures, training and merchandise to last for several weeks.

Fees run from $40,000 for a small outlet to upwards of $750,000 for large ones.

One such supplier is Dollar Store of Irvine, Calif., not to be confused with other businesses using the same ubiquitous name. Jim Williams, director of business development, said it sells items for 12 cents to 90 cents each, with shipping, to anyone with a store.

"You have to learn to put together the proper mix," said Williams, meaning the "cheaper stuff" with a higher profit, with the higher-end goods that bring in customers.

Once a haven for low-income households, dollar stores also draw moderate- and upper-income shoppers, according to Retail Forward. At the Woodrings' store in Lakewood, for example, Judy Alexander of Gig Harbor was buying Garden Goodness dressing one day. She works for a merchandising firm, and her husband is a sales rep, so they have discretionary income.

"But should I pay more than a dollar for salad dressing, if I don't have to?" she asked.

Still, many are on tight budgets. Fifty miles north of the Woodrings' store, the Dollar Tree chain opened an outlet two years ago at 13233 Aurora Ave. North, with a straightforward philosophy.

"It's simple math. I have $10 in my pocketbook to spend. I can get 10 items," said Barbara Seman, vice president of marketing.

Shopping there was Tracy Stefan, 38, who works as a server at a restaurant, earning between $10 to $15 an hour. She was going through her list: adhesive bandage, aspirin, dish detergent, laundry detergent, canned tuna, disposable razors for her boyfriend. She spent $26.83.

"This toilet paper? It's two-ply," said Stefan. "The tuna is dolphin-safe [Van Camp's, distributed by Chicken of the Sea]. Why spend $50 to $70 for the same stuff?"

Busiest time of month

It's the first of the month that their stores do best, said Arlene Woodring. "It's payday."

Among the Woodrings' customers recently was Jamal Youchum, 32, and his wife, Jennifer Youchum, 26. They have three children and live in a townhouse that rents for $625 a month.

He's the breadwinner, working nights as a dishwasher and server at a restaurant for $7.50 an hour, a bit more with tips.

On this day, they were just looking around, though on a previous trip they had bought aluminum foil, garbage bags, envelopes and other household items.

When their school-age daughters come with them, Youchum gives them each $2 or $3.

"They go crazy buying candy and stuff," he said.

It is, definitely, a dollar world.

Erik Lacitis: 206-464-2237