2Bits: Farmer Market Pricing—Use Proven Dollar General Marketing Strategies!
“Selling means cheap. Marketing means a good price.”
Dan Undersander, forage agronomist-University of Wisconsin-Madison
Farmer market managers work to increase visitor traffic, which often involves creating greater access to healthy foods for lower income buyers. How can farmers successfully market their products to these households?
A lot can be learned from the highly profitable Dollar General retail chain! First, a few facts about this low-cost retail giant.
- Their core customers are households earning less than $40,000.
- The United State’s largest grocer, Kroger Co., has revenue that is 5 times that of Dollar General’s. However, Dollar General market value of $22 billion is much greater than Kroger’s market value.
- Dollar General’s 14,000 U.S. stores (and growing) yield more than double the profit of Macy’s during this last fiscal year.
- In the past, Dollar General didn’t offer fresh meat, greens, or fruits. Now many stores are adding a refrigerated section and starting to offer frozen and chilled food items.
How does Dollar General successfully market to frugal shoppers and maintain profitability?
- Smaller sizes and quantities allow for higher margins per unit, so try downsizing your product or produce units and charge more for these. Put 6 eggs per carton instead of 12. Offer pints instead of quarts. Try ½ lb. units instead of 1 lb. units. Sell 4 oz. jars instead of 6 oz.
- Price in 5 cent increments. Now it’s easier for shoppers to estimate the total price of purchasing from your market booth. This encourages them to buy more. It is less embarrassing for them when you total the price.
- Two successful marketing techniques Dollar General uses:
- Incorporate camouflage in the product packaging.
- Identify or specially label items for “Service Members” or for members of the military. These techniques provide a great way to honor families that serve our country.
An important Dollar General practice that new farmers should consider:
Dollar General doesn’t own most of its stores. It leases them. This allows them to keep new store opening costs lower than the average grocery or big-box store. This is also a good idea for new farmers! Leasing or renting land lowers debt. Lower debt gives new farmers greater flexibility while they’re learning how to streamline production processes and incorporate best practices.