Cal Turner Jr., retired CEO of Dollar General, likes to explain how his father came up with the concept of “Dollar Pricing.” The “City boys” in Louisville and Nashville retailers would run monthly advertising for “Dollar Days,” where for one day a month, everything was priced at a dollar. Cal Senior figured they spent so much money advertising that they had to be making lots of money on it. He pitched the idea of “Every Day is a Dollar Day” to his team, but everyone hated it. They agreed to try it out on a money-losing Turner Department Store in Springfield, Kentucky.
It took 4 days to open the first store – they leased a building at a $1 square foot, loaded the fixtures and merchandise on Monday and Tuesday, put the merchandise out on Wednesday and Thursday, and opened to the public on Friday. When the store opened, so many people mobbed the place that they had to close the doors, only letting new customers in when other customers left.
Cal Junior tells how his father worked with suppliers in innovative ways. One manufacturer had an excess of fabric, thousands of bolts of pink corduroy. Cal Senior had him cut the fabric into pants, selling them for one dollar. Soon after, the town was filled with big, brawny farmers all wearing pink corduroy pants, giving the town a surprising hue.
You can stream/download the full conversation, including the podcast extras on iTunes, Bloomberg, Overcast, and Stitcher. Our earlier podcasts can all be found on iTunes, Stitcher, Overcast, and Bloomberg.
Next week, we speak with Dr. Raife Giovinazzo, who manages Fuller & Thaler’s Behavioral Small Cap Equity strategy.