Discount Retailer Strategy Summary

Discount retailers have seen increasing competition in recent years as the number of discount stores has risen dramatically. However, many of the competitors within the industry offer products at various price points and do not have a specific differentiation strategy from competitors based solely on price. Within the discount retail industry, I would classify Dollar Tree as utilizing a focus-low-cost strategy according to Porter’s generic strategy framework. Dollar Tree is one of the few major competitors within the discount retail industry that has been able to differentiate itself with its pricing strategy, which is to keep all products at or below a dollar. The low-cost portion of the strategy has made this price point possible, so I would continue utilizing this strategy at this point. As Woloson (2012) points out, Dollar Tree risks diluting its image and branding strategy by straying from its flat one-dollar policy. …show more content…
I would therefore be hesitant to change that strategy. Utilizing the Miles and Snow typology framework, I would argue that Dollar Tree is utilizing a defender strategy, along with the majority of other companies in the industry. Discount retailers operate within a mature industry, and the defender strategy tends to be utilized most effectively in this industry life cycle stage (Parnell, 2014). Dollar Tree is continuing to position itself well in the industry through acquisitions. However, I would be hesitant to recommend Dollar Tree continue to acquire companies that are outside of its price differentiation strategy, such as Family Dollar was. Continuing to acquire organizations out of its area of expertise may prove to be too complex and cumbersome for Dollar Tree to continue effectively utilizing its current