Making a Buck: How Do Dollar Stores Make Any Money?

Justin Sullivan/iStock via Getty Images
Justin Sullivan/iStock via Getty Images

While the prices of everything from lattes to movie theater tickets have inflated in recent years, dollar stores are somehow still around. It's true that not every item sold by chains like Dollar General and Dollar Tree costs a dollar, but there are enough of them on the shelves to attract customers looking for good deals. That raises the question—if every other retailer seems to be raising prices, how do dollar stores keep making money?

The truth is that the cheap deals dollar stores advertise aren't always as generous as they seem. As How Stuff Works explains, many of the $1 products sold at these chains are actually less of a bargain than the more expensive—and larger—versions sold at grocery stores. A $1 16-oz bottle of milk at the dollar store, for instance, is being sold for more than $.06 an ounce. The average U.S. price for milk in December 2018 was $3.27 per gallon [PDF], or less than $.03 an ounce.

These tricks are even harder to spot with products like aluminum foil, which can be sold in 15-foot rolls for $1 in dollar stores and 75-foot rolls for $4 in big-box chains, but come in similarly sized boxes. By sizing-down products and using $1 price tags to apply the illusion of value to everything in their inventory, dollar stores are able to turn a profit that can be higher than stores like Walmart.

Of course, there are dollar store customers who know that spending a little more money for larger quantities will get them better value in the long run. But this isn't feasible for everyone; when shoppers only have enough money to get them through the week, or even the day, dollar stores are a tempting option.

That brings up another strategy these companies use to stay in business: targeting low-income communities. According to Mashed, Dollar General intentionally sets up shop in neighborhoods where quick access to cheap, shelf-stable food is not just a convenience, but a necessity. Many of these communities are considered "food deserts," or places that are isolated from supermarkets and other stores that sell fresh, nutritious food. In some cases, dollar stores help create food deserts by drawing customers away from local grocery stores and independent businesses until they're the only game in town. Some cities have even begun passing laws to limit the expansion of Dollar General and Dollar Tree to prevent them from becoming the primary food source for low-income families.

Even with tighter regulations, the retail strategy dollar stores have perfected will likely keep them a fixture of strip malls for years to come. Here are some more behind-the-scenes facts to demystify your dollar store experience.

[h/t How Stuff Works]

In What Field Was Dr. Martin Luther King Jr. a Doctor?

Express Newspapers/Getty Images
Express Newspapers/Getty Images

Martin Luther King Jr. earned a doctorate in systematic theology from Boston University in 1955. He’d previously earned a Bachelor of Arts from Morehouse College and a Bachelor of Divinity from Crozer Theological Seminary. His dissertation, “A Comparison of the Conception of God in the Thinking of Paul Tillich and Henry Nelson Wieman,” examined the two religious philosophers’ views of God in comparison to each other, and to King’s own concept of a "knowable and personal" God.

In 1989, some three decades after King had earned his doctorate, archivists working with The Martin Luther King Papers Project discovered that King’s dissertation suffered from what they called a “problematic use of sources.” King, they learned, had taken a large amount of material verbatim from other scholars and sources and used it in his work without full or proper attribution, and sometimes no attribution at all.

In 1991, a Boston University investigatory committee concluded that King had indeed plagiarized parts of his dissertation, but found that it was “impractical to reach, on the available evidence, any conclusions about Dr. King's reasons for failing to attribute some, but not all, of his sources.” That is, it could have been anything from malicious intent to simple forgetfulness—no one can determine for sure today. They did not recommend a posthumous revocation of his degree, but instead suggested that a letter be attached to the dissertation in the university library noting the passages lacked quotations and citations.

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Who Is 'The Real McCoy'?

Inventor Elijah McCoy is may or may not be "The Real McCoy."
Inventor Elijah McCoy is may or may not be "The Real McCoy."
Ypsilanti Historical Society, CC BY-SA 4.0 via Wikimedia Commons

After taking a cool, carbonated sip of champagne from the Champagne region of France, you might say, “Ah, now that’s the real McCoy.” Sparkling wine from anywhere else is technically just sparkling wine.

The phrase “the real McCoy,” which can be used to describe any genuine version of something, has several possible origin stories. And while none of them mention champagne, a few do involve other types of alcohol.

According to HowStuffWorks, the earliest known recorded instance of the saying was an 1856 reference to whisky in the Scottish National Dictionary—"A drappie [drop] o' the real MacKay”—and by 1870, a pair of whisky distillers by the name of McKay had adopted the slogan “the real McKay” for their products. As the theory goes, the phrase made its long journey across the pond, where it eventually evolved into the Americanized “McCoy.”

Another theory suggests “the real McCoy” originated in the United States during Prohibition. In 1920, Florida-based rum runner Bill McCoy was the first enterprising individual to stock a ship with alcohol in the Caribbean, sail to New York, and idle at least three miles offshore, where he could sell his wares legally in what was then considered international waters. Since McCoy didn’t water down his alcohol with substances like prune juice, wood alcohol, and even turpentine, people believe his customers started calling his top-notch product “the real McCoy.” There’s no definitive proof that this origin story is true, but The Real McCoy rum distillery was founded on the notion.

There are also a couple other leading theories that have nothing to do with alcohol. In 1872, inventor Elijah McCoy patented a self-regulating machine that lubricated parts of a steam engine without the need for manual maintenance, allowing trains to run continuously for much longer distances. According to Snopes, the invention’s success spawned a plethora of poor-quality imitations, which led railroad personnel to refer to McCoy’s machines as “the real McCoy.”

Elijah McCoy’s invention modernized the transportation industry, but he wasn’t the only 19th-century McCoy who packed a punch. The other was welterweight champion Norman Selby, better known as Kid McCoy. In one story, McCoy decked a drunken bar patron to prove that he really was the famous boxer, prompting others to christen him “the real McCoy.” In another, his alleged penchant for throwing fights caused the press to start calling him “the real McCoy” to acknowledge when he was actually trying to win. And yet another simply suggests that the boxer’s popularity birthed so many McCoy-wannabes that Selby started to specify that he was, in fact, the real McCoy.

So which “the real McCoy” origin story is the real McCoy? The 1856 Scottish mention of “the real MacKay” came before Elijah McCoy’s railroad invention, Kid McCoy’s boxing career, and Bill McCoy’s rum-running escapades, but it’s possible that the phrase just gained popularity in different spheres at different times.

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