Macon on the Makin’ of the Dollar Tree

Macon Brock at a local Dollar Tree location (Photo by Lawrence Jackson/The Virginian-Pilot)

By Jeff Maisey

Whether you’re a lifelong resident of Hampton Roads or someone thinking of starting a business for the first time, Macon Brock’s “One Buck at a Time: An Insider’s Account of How Dollar Tree Remade American Retail” is a must-read.

Brock, co-founder and chairman of the retail giant, provides a plain-spoken, intriguing look at how a group of friends operating a K&K toy store business at Wards Corner in Norfolk transitioned into the Dollar retail business and perfected a national model of success.

Today Dollar Tree, which opened in 1986, operates more than 6,000 stores in 48 states and five Canadian provinces. As of May 2016, Forbes magazine reported Dollar Tree’s annual sales to be $15.5 billion and ranked the Chesapeake-based business at #855 on its Global 2000 list.

Throughout “One Buck at a Time,” Macon Brock, who paired with Earl Swift to pen the book, takes us every step of the way from his early childhood in Norfolk and his days as a Marine Corps captain and Naval intelligence officer to his roots in retail learned from the Perry family to becoming CEO of Dollar Tree.

I recently caught up with Brock to discuss his book. (Note book signing are scheduled at 6 PM on February 9 at Chrysler Museum of art and February 11 at Prince Books at 3 PM). Here’s our conversation:

Growing up in Norfolk and attending Granby High School and then serving in the military, how did those experiences shape you in the future as a businessman?

I was born in what is Kempsville in Princess Anne County when my father was a doctor in the Grandy Sanatorium. I had a normal life. I don’t think anything shaped me particularly.

I think the most important event as I matured – as the books says I was kind of a happy-go-lucky guy – but I’d say Randolph Macon College where I began to buckle-down and get grades, and then my experience in the Marine Corps, particularly officer candidate school and the basics school had a big influence on me. None of that helped me in business particularly; it helped me in leadership, knowledge and maturity because I was a young lad. When I got into business I could adapt to the business principles.

Mr. Perry, who had a business, we joined that in retail. I found that fun, really. I liked retail, and after service I had to do something when I got out. He offered me that and I said, “Well, let me try it. I might learn something.” It turned into a real successful career by joining the Perrys and their business. Later on Doug (Perry) joined we all made a business. We always put the company first and worked hard.

 

You say in the book “retail is not for the faint of heart,” when you early on were working in the retail toy business, what lessons did you learn that applied directly to launching the Dollar business?

 

What you mean by faint of heart is retail is hard work. It’s basic hard work. It’s long hours, weekends and holidays. You’re on your feet.

As a retail shop owner you have to do everything. People come out of college, or maybe some other experience, they want to be an executive or a buyer but it all starts at the grassroots, in the stockroom, the store shelves. It’s not for everybody, but it is a very rewarding career because you get to see the latest trends and merchandise and try to sell it. That part of it is exciting.

We started out as a toy business because we had a base – Mr. Perry’s 5 & 10 Cents store – when I joined in the late ‘60s. It had a little toy department. We grew that. Toys were just beginning to take off as a category of retail. At the time prior to that, all the toys were sold in department stores. With the advent of television and the malls – we were able to get a spot at Military Circle – and the excitement of growing a business that was focused solely on toys…Our stores were strictly toy shops, and with all the traffic in malls you could sell like heck.

The way it helped me in the Dollar business is that we learned how to operate stores; the basic logistics, financial disciplines, inventory management, it applied over to the Dollar business as well. So we had an operational expertise.

 

I was curious to read in the book that your toy business encountered newfound competition from big box toy store chains like Toys R Us and then encountered the beginning of electronic toys and games.  That was a game-changer, right?  

 

That’s what changed the business fundamentally.  Initially, toy shops like us – and there were several of them around the country – eventually sold out to the bigger chain, KB Toy. They were like us, but bigger.

The other factor in toy retail was these giant superstores like Toys R Us. They did affect our business because they were so large and attracted a lot of business. But that was not what changed us. We could compete with those businesses. What changed the fundamental toy business was the electrification of all the toys. The video games and the tsunami of electronic toys began to take over the industry. Then people changed. Their patterns changed. Their kids were more fascinated with electronic gaming than they were in the fantasy play. That changed the structure of the toy companies. Today you only have one or two toy companies selling to one or two retailers. It’s not a vibrant business today like it was.

 

People today can relate as they look at how technology overall has impacted retail on all levels with the exception, ironically, being the Dollar retail business. Is the Dollar Tree concept both recession and technology proof?  

 

Well, nothing’s ever proof. But I will say what we intended the Dollar business to do – and it has come to be a fact – we had an idea of selling everything for a dollar, of course, and that was similar in a way to what 5 & 10 Cent stores did in another era – Woolworths for example. They went away. In place of it came giant shopping malls and freestanding big box strips in the suburbs. So they left a gap in retail for incidental, convenient, value shopping for the family. Wherever we put one of our stores it resonated with consumers without any advertising. They just loved the price point and they loved what we carried. It’s incidental shopping. It’s two or three bucks and done, instead of these cavernous big box stores where not only is it hard to find it, the prices they were offering was quite a bit more. So the value was clear to the customer and they accepted it. So we decided to put the stores conveniently around shopping center America wherever people were. All we needed was traffic. We put a little store in that area and it would thrive without promotion just because we were hitting a niche with the consumer that wasn’t being filled, and still isn’t filled now.

Internet, Amazon and all that – we have our own website. You can buy things online from us, too, but for a buck or two people don’t look to gravitate for that kind of buying as readily as they do larger ticket items and things you really have to shop for.

So we are somewhat insulated, but not isolated.  We’re not completely immune to internet retailing.

 

People often shop on Amazon and eBay because they hope to save $10 or $20 dollars. It’s much less likely they are shopping to save 10 cents on a one dollar item, correct?

 

Right. Even on our own website we can’t afford to pay the freight and ship one dollar at a time. We’re not geared that way so we ask people to order either a case. People don’t always want that much of an item. The appeal is less because of the quantities you have to buy.

 

There is a photograph in the book of you and your wife on a buying trip in Asia. What types of merchandise were you seeking on these sorts of trips? And related, how much did the value of the US dollar play in your decision making as currency markets fluctuate over time?

 

We were looking for anything we could sell and make a profit.

When we went to China – it was in the ‘80s or early ‘90s – what was available in these showrooms over there was absolutely astounding. We were like a kid in the candy store. So much of the everyday, household merchandise was made in the Far East. We’d go to the showrooms and pick and choose, discuss and negotiate what we could buy if they were willing to meet a price that allowed us to bring it in. When we did that the reason it was such a value is because there was no more markup on it. So much merchandise at that time, and still today, was going through a couple of hands of markup.  Wholesalers would buy it. Then another wholesaler would have it before it finally got to retail. So the prices were too high. We were able to find regular goods and undersell almost everybody in the market.

 

Have there been particular items you thought would be big sellers but moved slowly on the shelves? And on the flipside, were there any surprising strong sell items you initially thought might be so-so?

 

It’s all a question of how many do you buy when you see something you like. You have to guess at how many to buy. Of course, there’s a lead-time to buy things from Asia. So much just flew out so quick. You’d buy it again the following year but you never had enough.

Occasionally, we had leftovers, or what I would call the drags, of merchandise. Maybe it would be a quality problem from a vendor or it would get damaged in the store. It was always a residual inventory that we would have to liquidate, but we always kept it under two-percent.

We didn’t have any huge faux pas. Almost everything we bought we would sell.

Now if you bought too many then you felt like you had a dog. As a example, if you bought a million pieces and you sold 800,000, but you still had 200,000 left – we felt like, oh, it didn’t sell well. But, in fact, you sold 800,000.

 

Is there a trick of the trade in ordering seasonal items? I imagine Dollar Tree does great with Christmas wrapping paper and Halloween décor.

 

Well seasonal really became our calling card. Still today, even as large as we are, we still focus on the seasons. It is very predictable what people buy every year. Think birthdays. Every year you have a birthday. That’s a party, and gift giving.

Seasons come around routinely. Valentine’s. Easter. Halloween. Christmas. And some lesser holidays like St. Paddy’s Day.

We always offered incidental, fun things that people could buy for a buck. Then they throw it away. Decorations. Gift papers. Tree decorations. It’s very predictable, the routine. But we always change somewhat the inventory but we focus seasonally the front of all our stores the seasonal offering.

We carry consumer goods, too. That’s the big change over time. The stores now are much larger.

We classify our inventory with two broad descriptions: needs-based inventory; that’s stuff you need to live your life, meaning food, snacks, paper goods. You use them up. The non-need basis; what you call discretionary, is all the seasonal stuff – things that are just extra. People on a fixed budget will buy less of that because they have less to spend.

We have a balance of both.

 

There is a lot of focus on encouraging young people to create a start-up business and to become entrepreneurs. What do you hope some recent high school or college graduate finds as a valuable takeaway from reading your book and your life experience?

 

There’s no magic bullet to anything. Startup businesses are just basic hard work. You get an idea and just work hard at it. It’s just basic blocking and tackling, certainly in retail.

Today’s entrepreneurs are using all these apps and the telephones and so on. I’m too old to understand all of that. But those kinds of entrepreneurs are growing like grass.

Shop retailing is not easy. You have to keep the customer in mind, show value and honesty. Our whole company’s success is based on honesty, integrity, hard work and attitude. If you use those you can make about anything work.

BOOK SIGNINGS

Thursday, February 9

6:00 – 8:00 PM

Chrysler Museum of Art
One Memorial Place

Norfolk, VA  23510

Reception, followed by talk/book signing.
Friday, February 10

3:00 PM

Randolph-Macon College Campus bookstore
114 College Ave

Brock Commons lobby (Student Center)

Ashland, VA  23005

Talk/book signing.

 

Saturday, February 11

3:00 PM

Prince Books

109 E. Main Street

Norfolk, VA 23510

Talk/book signing.

 

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