One Dollar Is the Best Price Point Ever
(Bloomberg Opinion) -- Cal Turner Jr., retired chief executive officer of Dollar General Corp. and this week's guest on Masters in Business, likes to explain how his father came up with the concept of dollar pricing. Department stores in Louisville, Kentucky, and Nashville, Tennessee, would run monthly advertisements for "dollar days,” one day each month when merchandise cost a dollar. Cal Sr. figured the retailers had to be making money on the discount days because they were clearly spending a lot on advertising and they kept on doing it.
Turner Sr., who owned a chain of department stores with his father James, decided to convert a store in Springfield, Kentucky, into a dollar retailer. The store was stocked with goods from Monday through Thursday. When the doors opened to the public on Friday, so many people mobbed the place that they had to turn away customers, only letting in new shoppers when others left. By 1968, the chain was so successful that it dropped the J.L. Turner and Son name and became Dollar General.
Cal Jr. also discussed how his father worked with suppliers in creative and mutually beneficial ways. One manufacturer had a surplus of fabric, thousands of bolts of pink corduroy. Cal Sr. had him use the fabric to make into pants, selling them for $1 a pair. Soon after, the town was filled with big, brawny farmers wearing pink corduroy pants.
Next week, we speak with Raife Giovinazzo, who manages Fuller & Thaler Asset Management Inc.'s behavioral small cap equity strategy.
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