WEBVTT 00:00:00.000 --> 00:00:01.919 You know that feeling when you walk into a store 00:00:01.919 --> 00:00:05.480 with, like, one incredibly simple objective? 00:00:05.559 --> 00:00:07.519 Oh, absolutely. Yeah, let's say you just need 00:00:07.519 --> 00:00:10.919 a roll of paper towels. So you walk through the 00:00:10.919 --> 00:00:13.320 automatic doors. The bright fluorescent lights 00:00:13.320 --> 00:00:15.919 are humming. The aisles are just packed wall 00:00:15.919 --> 00:00:18.620 to wall with bright packaging. Right. And somehow, 00:00:18.800 --> 00:00:20.500 20 minutes later, you're walking out with the 00:00:20.500 --> 00:00:23.679 paper towels, yes, but also, like, a ceramic 00:00:23.679 --> 00:00:27.100 frog, three spatulas, and a pack of off -brand 00:00:27.100 --> 00:00:31.079 batteries. It is a completely... Unpredictable. 00:00:31.280 --> 00:00:33.859 Yet somehow inevitable haul. I mean, we've all 00:00:33.859 --> 00:00:35.520 been there, right? Staring at our bags in the 00:00:35.520 --> 00:00:37.719 parking lot, just wondering, what on earth just 00:00:37.719 --> 00:00:39.100 happened? Exactly. We have all done it. And then 00:00:39.100 --> 00:00:40.520 you look at the receipt and it's practically 00:00:40.520 --> 00:00:43.780 nothing. But what feels like this chaotic, maybe 00:00:43.780 --> 00:00:46.439 slightly quirky discount shopping trip is actually, 00:00:46.479 --> 00:00:48.500 well, an encounter with one of the most highly 00:00:48.500 --> 00:00:50.960 engineered, ruthless economic engines in the 00:00:50.960 --> 00:00:53.740 modern world. It really is. So today on this 00:00:53.740 --> 00:00:56.700 deep dive, we are unpacking the multi -billion 00:00:56.700 --> 00:00:59.679 dollar psychology and the hidden global infrastructure 00:00:59.679 --> 00:01:02.630 of the variety. You know them, the dollar store, 00:01:02.789 --> 00:01:04.769 the pound shop, the five and dime. Yeah, they 00:01:04.769 --> 00:01:06.930 go by a lot of names. Right. And our sources 00:01:06.930 --> 00:01:09.950 today draw from a really comprehensive encyclopedic 00:01:09.950 --> 00:01:12.730 overview of the entire variety store industry. 00:01:13.189 --> 00:01:15.209 We're looking at everything from supply chain 00:01:15.209 --> 00:01:19.370 economics to global cultural impacts. So, okay, 00:01:19.510 --> 00:01:22.260 let's unpack this. Because this industry is just 00:01:22.260 --> 00:01:25.219 a master class in behavioral economics, and it's 00:01:25.219 --> 00:01:27.980 hiding right in plain sight in almost every neighborhood. 00:01:28.439 --> 00:01:30.060 Yeah. And what's fascinating here is the sheer 00:01:30.060 --> 00:01:32.719 scale of this industry today. When we talk about 00:01:32.719 --> 00:01:34.879 these stores, we're not just talking about a 00:01:34.879 --> 00:01:37.739 convenient place to buy cheap spatulas or emergency 00:01:37.739 --> 00:01:39.900 paper towels. Right. It's bigger than that. Much 00:01:39.900 --> 00:01:43.280 bigger. We're looking at a multi -billion dollar 00:01:43.280 --> 00:01:45.900 global infrastructure. And honestly, it's the 00:01:45.900 --> 00:01:47.939 perfect lens through which we can understand 00:01:47.939 --> 00:01:51.010 modern global economics. supply chain logistics, 00:01:52.629 --> 00:01:55.010 and the incredibly strange quirks of consumer 00:01:55.010 --> 00:01:57.709 psychology. Absolutely. So as you are listening 00:01:57.709 --> 00:01:59.530 to this, I want you to think about the last time 00:01:59.530 --> 00:02:01.890 you walked into one of these stores for a single 00:02:01.890 --> 00:02:03.969 item and walked out with a bag full of things 00:02:03.969 --> 00:02:06.390 you didn't know you needed. Why does that happen? 00:02:06.599 --> 00:02:09.000 The great question. To understand how these stores 00:02:09.000 --> 00:02:11.620 lure us in, we first have to look at the economic 00:02:11.620 --> 00:02:13.900 reality of how they actually make a profit while 00:02:13.900 --> 00:02:17.039 seemingly charging so little. And frankly, I 00:02:17.039 --> 00:02:18.699 kind of want to push back on the basic premise 00:02:18.699 --> 00:02:20.620 that everything in these stores is actually cheap. 00:02:21.159 --> 00:02:22.960 Wait, how do you mean? I mean, it literally says 00:02:22.960 --> 00:02:24.900 a dollar right on the side. Right, I know, but 00:02:24.900 --> 00:02:27.340 the pricing model isn't just about selling cheap 00:02:27.340 --> 00:02:30.020 stuff at a low margin. It feels a lot more like 00:02:30.020 --> 00:02:34.099 an economic magic trick. Oh, an illusion. Yeah. 00:02:34.340 --> 00:02:37.159 Think about how a stage illusionist works. Their 00:02:37.159 --> 00:02:40.259 entire craft relies on redirecting your attention, 00:02:40.379 --> 00:02:43.199 right? They flash something bright and shiny 00:02:43.199 --> 00:02:45.180 in their left hand, so you completely ignore 00:02:45.180 --> 00:02:47.020 what their right hand is doing behind their back. 00:02:47.099 --> 00:02:48.960 That makes a lot of sense. It seems like the 00:02:48.960 --> 00:02:51.300 dollar store is doing exactly that with its prices. 00:02:51.780 --> 00:02:54.710 They use these incredible heavy discounts on 00:02:54.710 --> 00:02:57.469 certain high -visibility items to make your brain 00:02:57.469 --> 00:02:59.789 assume that absolutely everything in the store 00:02:59.789 --> 00:03:02.449 is a bargain, even when it's really not. That 00:03:02.449 --> 00:03:05.560 is a brilliant analogy. and it perfectly captures 00:03:05.560 --> 00:03:08.460 their dual profit mechanism. Okay, dual profit 00:03:08.460 --> 00:03:11.400 mechanism. Break that down for us. So the illusionists 00:03:11.400 --> 00:03:13.939 bright flash, right? That's the deeply discounted 00:03:13.939 --> 00:03:16.840 merchandise. They buy and sell vast amounts of 00:03:16.840 --> 00:03:20.479 these goods, accepting a tiny, almost microscopic 00:03:20.479 --> 00:03:23.340 profit margin. Wow. Yeah, and that only works 00:03:23.340 --> 00:03:26.280 because the sales volume is so astronomically 00:03:26.280 --> 00:03:29.080 massive. They are moving millions of units, making 00:03:29.080 --> 00:03:31.400 literal pennies on each one, and just relying 00:03:31.400 --> 00:03:33.599 on massive foot traffic to make the math work. 00:03:33.520 --> 00:03:36.879 Right, so the sheer overwhelming quantity makes 00:03:36.879 --> 00:03:39.780 up for the tiny margin. But what's the other 00:03:39.780 --> 00:03:42.120 hand doing? Where's the misdirection happening 00:03:42.120 --> 00:03:44.199 in the aisles? Well, the misdirection is happening 00:03:44.199 --> 00:03:46.759 with the items that are actually priced higher 00:03:46.759 --> 00:03:48.580 than they would be at a traditional full -scale 00:03:48.580 --> 00:03:51.400 retailer. Wait, higher? How does a store mathematically 00:03:51.400 --> 00:03:53.419 pull that off if they operate on a fixed price 00:03:53.419 --> 00:03:55.659 point, like a dollar is a dollar? It is, but 00:03:55.659 --> 00:03:58.219 volume is entirely malleable. Oh, OK. Yeah, they 00:03:58.219 --> 00:04:00.259 reduce the package size. They shrink the unit 00:04:00.259 --> 00:04:03.000 volume specifically to fit that single price 00:04:03.000 --> 00:04:06.939 point. Yeah. So picture this. You might pay one 00:04:06.939 --> 00:04:09.740 dollar for a miniature specialized bottle of 00:04:09.740 --> 00:04:11.800 name brand dish soap. Right. I've seen those. 00:04:12.039 --> 00:04:14.860 It feels like a fantastic deal because you're 00:04:14.860 --> 00:04:17.360 holding a premium brand and only handing over 00:04:17.360 --> 00:04:20.180 a single bill. But if you actually stopped and 00:04:20.180 --> 00:04:22.899 calculated the price per ounce, you are paying 00:04:22.899 --> 00:04:25.060 a significant premium compared to just buying 00:04:25.060 --> 00:04:28.680 a standard full -size bottle at a regular supermarket. 00:04:29.040 --> 00:04:31.500 Oh, wow. But because you are standing in an aisle 00:04:31.500 --> 00:04:35.540 surrounded by actual legitimate bargains, your 00:04:35.540 --> 00:04:38.100 brain's critical pricing filter just kind of 00:04:38.100 --> 00:04:40.379 turns off. Exactly. You just assume the soap 00:04:40.379 --> 00:04:43.240 is a bargain, too. That is so incredibly sneaky. 00:04:43.439 --> 00:04:45.319 And I mean, it completely works. I have definitely 00:04:45.319 --> 00:04:47.300 fallen for the mini dish soap. Most people have. 00:04:47.439 --> 00:04:50.139 But it raises a massive logistical question for 00:04:50.139 --> 00:04:52.540 me. Where are they getting all this inventory 00:04:52.540 --> 00:04:54.399 to begin with? I mean, I know there are generic 00:04:54.399 --> 00:04:57.180 brands and private labels which are obviously 00:04:57.180 --> 00:05:00.160 manufactured using cheaper materials to specifically 00:05:00.160 --> 00:05:02.839 hit those low price points. Yes, generic brands 00:05:02.839 --> 00:05:04.779 are definitely the backbone of the supply chain. 00:05:05.439 --> 00:05:08.519 But to keep the shelves full and the whole treasure 00:05:08.519 --> 00:05:11.339 hunt aspect alive, they also rely really heavily 00:05:11.339 --> 00:05:14.360 on the gray market, as well as closeout and surplus 00:05:14.360 --> 00:05:18.779 stock. OK, pause right there. Gray market. That 00:05:18.779 --> 00:05:21.660 sounds like, I don't know, people selling VCRs 00:05:21.660 --> 00:05:24.240 out of the trunk of a car in an alleyway. Is 00:05:24.240 --> 00:05:26.420 that even legal? I know it sounds a bit shady, 00:05:27.019 --> 00:05:29.259 but the gray market is actually completely legal. 00:05:29.439 --> 00:05:33.100 OK. It refers to unofficial but legitimate distribution 00:05:33.100 --> 00:05:37.529 channels. Basically, it's genuine branded goods 00:05:37.529 --> 00:05:40.850 that are sold outside of the brand's authorized 00:05:40.850 --> 00:05:43.829 retail network. How does that happen? Well, for 00:05:43.829 --> 00:05:46.610 example, if a manufacturer produces way too much 00:05:46.610 --> 00:05:49.470 shampoo for a specific region, a third party 00:05:49.470 --> 00:05:51.569 liquidator might buy the excess at a massive 00:05:51.569 --> 00:05:54.089 discount and flip it to a dollar store. Oh, I 00:05:54.089 --> 00:05:55.860 see. Yeah, the brand didn't necessarily intend 00:05:55.860 --> 00:05:57.519 for it to be sold there, but it's totally legal. 00:05:57.740 --> 00:06:00.199 Yeah. They also heavily utilize things like promotional 00:06:00.199 --> 00:06:03.000 goods that didn't sell, seasonal items that are 00:06:03.000 --> 00:06:05.600 a month out of date, or stock liquidated from 00:06:05.600 --> 00:06:07.540 bankrupt companies. So they are essentially the 00:06:07.540 --> 00:06:10.819 vacuum cleaners of the global retail supply chain. 00:06:11.060 --> 00:06:12.819 Precisely. They sweep up everything. And there's 00:06:12.819 --> 00:06:15.399 a fascinating case study in our sources on just 00:06:15.399 --> 00:06:17.220 how far this model can be pushed. Let's hear 00:06:17.220 --> 00:06:19.540 it. There's a regional dollar store in the Syracuse, 00:06:19.600 --> 00:06:22.680 New York area. called real deals. And they survive 00:06:22.680 --> 00:06:25.959 almost entirely on surplus goods and out of date 00:06:25.959 --> 00:06:28.220 food products. Wait, out of date food? Hold on, 00:06:28.379 --> 00:06:30.819 I'm genuinely confused by the mechanics of that. 00:06:30.959 --> 00:06:32.980 I always assumed expiration dates were heavily 00:06:32.980 --> 00:06:35.740 regulated. Is it even legal to sell food past 00:06:35.740 --> 00:06:37.699 its expiration date to the general public? That 00:06:37.699 --> 00:06:40.319 is exactly where it gets complicated. And it 00:06:40.319 --> 00:06:43.620 really highlights how these supply chains have 00:06:43.620 --> 00:06:47.399 to expertly navigate local legislation. Because, 00:06:47.639 --> 00:06:50.350 well, the legality completely depends on your 00:06:50.350 --> 00:06:53.069 jurisdiction. Really? Yeah. In the United States, 00:06:53.209 --> 00:06:55.310 with the exception of certain highly perishable 00:06:55.310 --> 00:06:58.250 items, like infant formula, which depends on 00:06:58.250 --> 00:07:01.350 specific state laws, it is largely legal to sell 00:07:01.350 --> 00:07:03.170 products, regardless of their sell -by date. 00:07:03.339 --> 00:07:05.839 Wow. So in the US, a sell -by -date is really 00:07:05.839 --> 00:07:08.279 more of a suggestion for peak quality, not a 00:07:08.279 --> 00:07:10.420 hard legal boundary for safety. Essentially, 00:07:10.600 --> 00:07:12.620 yes. The federal government leaves a lot of that 00:07:12.620 --> 00:07:14.660 up to the discretion of the retailer and the 00:07:14.660 --> 00:07:17.759 consumer. But contrast that with the United Kingdom, 00:07:17.879 --> 00:07:20.040 where the laws are incredibly strict. OK, how 00:07:20.040 --> 00:07:23.279 so? In the UK, it is totally illegal to sell 00:07:23.279 --> 00:07:26.779 goods past their use -by -date, full stop. Oh, 00:07:26.779 --> 00:07:29.639 wow. So a store like Real Deals, relying heavily 00:07:29.639 --> 00:07:32.660 on expired goods, simply could not legally exist 00:07:32.660 --> 00:07:35.800 in the British retail ecosystem. The global supply 00:07:35.800 --> 00:07:38.819 chain has to constantly adapt to the legal realities 00:07:38.819 --> 00:07:40.939 of wherever the store is actually operating. 00:07:41.129 --> 00:07:43.850 That is wild. So next time you are standing in 00:07:43.850 --> 00:07:46.290 that aisle holding a brightly colored product, 00:07:46.649 --> 00:07:49.490 realize you aren't just getting a deal. You are 00:07:49.490 --> 00:07:51.750 interacting with a highly engineered pricing 00:07:51.750 --> 00:07:55.550 psychology, a global gray market, and a supply 00:07:55.550 --> 00:07:58.029 chain that navigates international food safety 00:07:58.029 --> 00:07:59.930 laws. There's a lot going on behind that one 00:07:59.930 --> 00:08:02.470 dollar price tag. It really is. Which seamlessly 00:08:02.470 --> 00:08:05.209 brings me to my next point. If the pricing is 00:08:05.209 --> 00:08:07.410 essentially a sophisticated psychological trick, 00:08:07.910 --> 00:08:09.670 it makes you wonder if our assumptions about 00:08:09.670 --> 00:08:12.170 the target audience are a trick too. Like, we 00:08:12.170 --> 00:08:14.889 know how these stores sell, but who exactly is 00:08:14.889 --> 00:08:16.970 falling for the magic trick? It's a really great 00:08:16.970 --> 00:08:19.329 question, and usually people's instincts on this 00:08:19.329 --> 00:08:21.870 are entirely wrong. Because, I'll be honest, 00:08:22.269 --> 00:08:24.170 my assumption, and I think a lot of people's 00:08:24.170 --> 00:08:26.709 assumption, is that these stores only truly thrive 00:08:26.709 --> 00:08:29.110 in low -income neighborhoods where household 00:08:29.110 --> 00:08:32.059 budgets are incredibly tight. Right. You picture 00:08:32.059 --> 00:08:34.879 communities where people absolutely need those 00:08:34.879 --> 00:08:37.340 rock bottom prices just to survive until the 00:08:37.340 --> 00:08:39.000 next paycheck. Is that really the whole story? 00:08:39.399 --> 00:08:42.480 It is a very common assumption, but the demographic 00:08:42.480 --> 00:08:46.480 data explicitly dismantles that myth. Let's look 00:08:46.480 --> 00:08:48.600 at a specific geographic anomaly from the source 00:08:48.600 --> 00:08:51.759 text. Uh, Atherton, California. Atherton. Wait, 00:08:51.759 --> 00:08:53.279 that's right in the middle of Silicon Valley, 00:08:53.360 --> 00:08:55.659 isn't it? It is. Atherton is consistently ranked 00:08:55.659 --> 00:08:57.720 as one of the most expensive zip codes in the 00:08:57.720 --> 00:09:00.759 entire United States. It has a median household 00:09:00.759 --> 00:09:04.799 income of nearly $185 ,000 a year. Wow. It's 00:09:04.799 --> 00:09:07.600 an incredibly wealthy area, home to tech executives 00:09:07.600 --> 00:09:10.759 and venture capitalists. And yet, there's a variety 00:09:10.759 --> 00:09:12.840 store operating right within its city limits. 00:09:13.279 --> 00:09:15.399 That completely flips the script. You really 00:09:15.399 --> 00:09:17.200 wouldn't expect to see a dollar store sharing 00:09:17.200 --> 00:09:20.259 a zip code with tech billionaires. Exactly. And 00:09:20.259 --> 00:09:22.200 this isn't just an isolated American anomaly 00:09:22.200 --> 00:09:25.000 either. When you look globally, the trend holds 00:09:25.000 --> 00:09:28.899 up. Take the U .K. chain, 99 P stores. OK. In 00:09:28.899 --> 00:09:31.080 the years following the 2008 global financial 00:09:31.080 --> 00:09:35.200 crisis, they reported a massive documented influx 00:09:35.200 --> 00:09:37.720 of higher income customers. So it's clearly not 00:09:37.720 --> 00:09:41.620 just about. strict financial necessity or stretching 00:09:41.620 --> 00:09:44.519 a meager paycheck. No, it's not. If we connect 00:09:44.519 --> 00:09:46.980 this to the bigger picture, we have to recognize 00:09:46.980 --> 00:09:49.620 the deep psychological appeal of the format itself. 00:09:50.220 --> 00:09:52.179 We talked earlier about the treasure hunt aspect, 00:09:52.480 --> 00:09:55.840 right? Finding that weird ceramic frog or a surprisingly 00:09:55.840 --> 00:09:58.320 good brand of shampoo for a dollar. Yeah, it's 00:09:58.320 --> 00:10:01.080 fun. That emotional rush, the dopamine hit of 00:10:01.080 --> 00:10:02.980 feeling like you outsmarted the system and found 00:10:02.980 --> 00:10:05.720 a bargain is universal. It appeals to the human 00:10:05.720 --> 00:10:09.179 brain across all tax brackets. Wealthy shoppers 00:10:09.179 --> 00:10:11.659 enjoy the thrill of a cheap, low -stakes impulse 00:10:11.659 --> 00:10:13.820 by just as much as anyone else. It's the joy 00:10:13.820 --> 00:10:15.960 of a harmless indulgence. I mean, you don't have 00:10:15.960 --> 00:10:18.460 to consult your budget to buy a dollar spatula. 00:10:18.779 --> 00:10:21.500 But while wealthy consumers in places like Atherton 00:10:21.500 --> 00:10:23.840 might casually dabble in these stores for the 00:10:23.840 --> 00:10:26.919 thrill of a bargain, the sheer density and heavy 00:10:26.919 --> 00:10:29.840 reliance on these stores in other, more vulnerable 00:10:29.840 --> 00:10:33.240 communities has triggered a massive, highly charged 00:10:33.240 --> 00:10:36.490 socioeconomic debate. It has. It's become a very 00:10:36.490 --> 00:10:39.230 serious point of contention and it's actively 00:10:39.230 --> 00:10:42.370 reshaping how cities think about urban planning. 00:10:42.600 --> 00:10:45.799 It reminds me of an invasive plant species arriving 00:10:45.799 --> 00:10:49.019 in a new delicate environment. It puts down roots, 00:10:49.340 --> 00:10:51.700 grows incredibly fast because it has no natural 00:10:51.700 --> 00:10:55.159 predators, takes over the landscape and fundamentally 00:10:55.159 --> 00:10:57.519 changes the local ecosystem. That's a strong 00:10:57.519 --> 00:11:00.080 visual. But depending on who you ask in the community, 00:11:00.159 --> 00:11:02.600 it's either a destructive weed choking out local 00:11:02.600 --> 00:11:06.639 life or it's a vital hardy crop providing necessary 00:11:06.639 --> 00:11:09.620 sustenance when nothing else will grow. So what 00:11:09.620 --> 00:11:11.039 does this all mean for the communities where 00:11:11.039 --> 00:11:13.460 these stores are heavily concentrated? Well, 00:11:13.519 --> 00:11:16.019 based on our sources, the absolute core of this 00:11:16.019 --> 00:11:18.639 controversy revolves around the food desert allegation. 00:11:19.240 --> 00:11:21.080 And I should note, this is a fiercely debated 00:11:21.080 --> 00:11:23.240 issue with very strong opinions on both sides. 00:11:23.720 --> 00:11:26.679 On one side, there are numerous academic studies 00:11:26.679 --> 00:11:29.759 and community advocacy organizations alleging 00:11:29.759 --> 00:11:32.299 that dollar stores actively proliferate food 00:11:32.299 --> 00:11:35.919 deserts. And for context, a food desert is a 00:11:35.919 --> 00:11:39.120 geographic area where residents have very limited 00:11:39.120 --> 00:11:41.879 or nonexistent access to healthy, affordable, 00:11:42.120 --> 00:11:45.259 fresh food, right? Let me see if I can guess 00:11:45.259 --> 00:11:47.580 how this mechanic works based on the supply chain 00:11:47.580 --> 00:11:50.320 stuff we talked about. A massive corporate dollar 00:11:50.320 --> 00:11:53.039 store moves into a small town. They use that 00:11:53.039 --> 00:11:55.919 immense supply chain to artificially lower prices 00:11:55.919 --> 00:11:59.240 on staple goods, milk, bread, canned goods, undercutting 00:11:59.240 --> 00:12:01.559 the local family -owned mom -and -pop grocery 00:12:01.559 --> 00:12:04.159 store. claim. They can afford to take a loss 00:12:04.159 --> 00:12:06.860 on those items, but the local grocer can't. So 00:12:06.860 --> 00:12:09.059 the local guy eventually goes bankrupt and shuts 00:12:09.059 --> 00:12:11.860 down. And once the competition is gone, the dollar 00:12:11.860 --> 00:12:14.360 store is the only place left standing. But because 00:12:14.360 --> 00:12:17.159 variety stores typically don't stock robust fresh 00:12:17.159 --> 00:12:19.639 produce or healthy perishables, the community 00:12:19.639 --> 00:12:22.159 is suddenly left with nothing but aisles of highly 00:12:22.159 --> 00:12:25.120 processed packaged foods. Is that the argument? 00:12:25.460 --> 00:12:27.919 That is exactly the mechanism being alleged by 00:12:27.919 --> 00:12:31.220 critics. They see it as a localized war of attrition. 00:12:31.440 --> 00:12:34.440 and the local grocer rarely has the capital to 00:12:34.440 --> 00:12:38.279 survive it. The ecosystem is completely altered. 00:12:38.340 --> 00:12:41.259 And this isn't just an academic debate happening 00:12:41.259 --> 00:12:44.159 in university classrooms either. The backlash 00:12:44.159 --> 00:12:47.840 has real legislative teeth. Several U .S. states 00:12:47.840 --> 00:12:50.419 and municipalities have actually passed zoning 00:12:50.419 --> 00:12:53.620 laws and restrictions, specifically limiting 00:12:53.620 --> 00:12:56.539 where new dollar stores can open, based entirely 00:12:56.539 --> 00:12:59.220 on the claim that they destroy local food infrastructure. 00:12:59.440 --> 00:13:02.000 That is a massive accusation. How do the corporations 00:13:02.000 --> 00:13:03.860 respond to that? They can't just ignore zoning 00:13:03.860 --> 00:13:06.139 laws blocking their expansion? Oh, they certainly 00:13:06.139 --> 00:13:08.960 don't ignore it, and they push back hard. The 00:13:08.960 --> 00:13:10.919 corporate counterargument from companies like 00:13:10.919 --> 00:13:13.440 Dollar Tree is a vehement denial that they cause 00:13:13.440 --> 00:13:16.740 food deserts. In fact, they argue the exact opposite. 00:13:16.779 --> 00:13:19.320 Really? How so? They state that they actually 00:13:19.320 --> 00:13:21.820 create food options in areas that were already 00:13:21.820 --> 00:13:24.240 heavily underserved. From their perspective, 00:13:24.700 --> 00:13:26.740 traditional grocers in large supermarkets had 00:13:26.740 --> 00:13:29.019 already abandoned these lower income or rural 00:13:29.019 --> 00:13:31.460 communities because the profit margins just weren't 00:13:31.460 --> 00:13:33.799 high enough. Oh, I see. Yeah, so they view themselves 00:13:33.799 --> 00:13:36.240 as stepping in to provide essential calories 00:13:36.240 --> 00:13:38.559 and household goods where nobody else is willing 00:13:38.559 --> 00:13:41.240 to operate. So the entire debate essentially 00:13:41.240 --> 00:13:44.210 boils down to cause and effect. Are the dollar 00:13:44.210 --> 00:13:46.429 stores the aggressive cause of the food desert, 00:13:46.750 --> 00:13:49.529 acting as a monopoly, or are they a symptom, 00:13:49.950 --> 00:13:52.590 acting as a lifeline for a community that traditional 00:13:52.590 --> 00:13:55.149 grocery chains already left behind? Precisely. 00:13:55.289 --> 00:13:57.570 It really highlights how fragile these local 00:13:57.570 --> 00:14:00.149 food networks are. And there was a specific event 00:14:00.149 --> 00:14:03.169 in 2023 regarding eggs that I think perfectly 00:14:03.169 --> 00:14:06.149 illustrates how dangerous it is when a community 00:14:06.149 --> 00:14:09.370 has to rely on a fixed price store for its survival. 00:14:09.470 --> 00:14:13.750 Yes. The 2023 egg pricing crisis. It's a perfect 00:14:13.750 --> 00:14:17.059 micro study of this exact vulnerability. Due 00:14:17.059 --> 00:14:19.720 to a variety of agricultural factors, the wholesale 00:14:19.720 --> 00:14:22.080 price of eggs skyrocketed globally. I remember 00:14:22.080 --> 00:14:24.480 that. Prices were crazy. Yeah. And in response, 00:14:24.860 --> 00:14:27.100 Dollar Tree reportedly stopped selling eggs entirely 00:14:27.100 --> 00:14:29.159 across its locations. Just pulled them from the 00:14:29.159 --> 00:14:31.620 shelves. Because they couldn't make the math 00:14:31.620 --> 00:14:34.500 work anymore. Exactly. It perfectly illustrates 00:14:34.500 --> 00:14:37.720 the inherent vulnerability of a fixed price model. 00:14:38.740 --> 00:14:41.240 When a massive corporate headquarters is tethered 00:14:41.240 --> 00:14:44.440 to a specific unyielding price point and inflation 00:14:44.440 --> 00:14:47.500 hits a vital staple food, They lack flexibility. 00:14:47.940 --> 00:14:49.860 Right. A traditional grocery store might raise 00:14:49.860 --> 00:14:51.659 the price of a carton of eggs to three or four 00:14:51.659 --> 00:14:54.480 dollars to cover their costs. Consumers might 00:14:54.480 --> 00:14:56.559 grumble, but the protein is still available. 00:14:57.259 --> 00:14:59.000 A dollar store can't do that without breaking 00:14:59.000 --> 00:15:01.539 its entire brand promise. They literally can't 00:15:01.539 --> 00:15:04.679 adapt. No. Their only viable financial option 00:15:04.679 --> 00:15:06.940 is to pull the item from the shelves entirely, 00:15:07.600 --> 00:15:10.159 which, if that store has become the only food 00:15:10.159 --> 00:15:12.519 source in town after the local grocer's closed, 00:15:12.879 --> 00:15:15.740 has immediate, drastic consequences for the community's 00:15:15.740 --> 00:15:17.840 diet. The corporate office hundreds of miles 00:15:17.840 --> 00:15:20.120 away decides the math on eggs no longer works 00:15:20.120 --> 00:15:22.820 and suddenly an entire neighborhood has no access 00:15:22.820 --> 00:15:25.919 to fresh protein. That's intense. It really is. 00:15:26.139 --> 00:15:29.279 So to understand how these stores gain the immense 00:15:29.279 --> 00:15:32.659 power to literally reshake local food ecosystems 00:15:32.659 --> 00:15:35.500 and dictate what a town eats, we have to look 00:15:35.500 --> 00:15:38.480 backward. How did we get from a quaint old fashioned 00:15:38.480 --> 00:15:41.759 five and dime to a corporate behemoth that dictates 00:15:41.759 --> 00:15:44.460 supply chains? Here's where it gets really interesting. 00:15:44.669 --> 00:15:47.230 It really is a remarkable historical evolution. 00:15:47.970 --> 00:15:50.830 The roots of this entire modern industry trace 00:15:50.830 --> 00:15:55.429 back to a specific day, February 27, 1879. A 00:15:55.429 --> 00:15:57.990 man named Frank Winfield Woolworth opened a shop 00:15:57.990 --> 00:16:00.350 called the Great Five Cent Store in Utica, New 00:16:00.350 --> 00:16:02.330 York. And from what I understand from the reading, 00:16:02.769 --> 00:16:04.110 people at the time thought he was completely 00:16:04.110 --> 00:16:06.230 out of his mind to try this. Completely. The 00:16:06.230 --> 00:16:08.009 prevailing thought in the retail industry in 00:16:08.009 --> 00:16:10.429 the late 19th century was that a store simply 00:16:10.429 --> 00:16:12.570 could not maintain itself financially by selling 00:16:12.570 --> 00:16:14.750 exclusively low priced goods. Right. They thought 00:16:14.750 --> 00:16:17.470 the overhead would eat them alive. Exactly. But 00:16:17.470 --> 00:16:19.950 Woolworth proved the skeptics wrong. He understood 00:16:19.950 --> 00:16:22.629 the magic trick of volume early on. He established 00:16:22.629 --> 00:16:24.669 the American Institution of the Five and Dime 00:16:24.669 --> 00:16:27.610 and his massive success spawned countless imitators 00:16:27.610 --> 00:16:30.080 across the country. But Woolworth's isn't around 00:16:30.080 --> 00:16:32.600 anymore, at least not in the United States. If 00:16:32.600 --> 00:16:34.820 the model was so successful, what happened to 00:16:34.820 --> 00:16:36.980 the pioneer of the industry? Well, it became 00:16:36.980 --> 00:16:39.460 a victim of changing demographics and shifting 00:16:39.460 --> 00:16:43.090 retail habits. In the 1950s and 60s, America 00:16:43.090 --> 00:16:46.169 experienced massive suburbanization. Ah, the 00:16:46.169 --> 00:16:48.389 move out of the cities. Right. People moved out 00:16:48.389 --> 00:16:50.629 of the dense downtown districts where the walkable 00:16:50.629 --> 00:16:53.029 five and dimes thrived. They started driving 00:16:53.029 --> 00:16:56.129 to expansive new shopping malls and larger big 00:16:56.129 --> 00:16:59.350 box discount stores. The old variety stores lost 00:16:59.350 --> 00:17:02.669 ground to specialized chains, huge office supply 00:17:02.669 --> 00:17:06.150 stores, massive toy stores, giant discount pharmacies. 00:17:06.380 --> 00:17:08.420 So they just couldn't compete with the scale. 00:17:08.539 --> 00:17:10.859 Yeah. Unable to adapt to the sprawling suburban 00:17:10.859 --> 00:17:13.240 model, the last U .S. Woolworths finally closed 00:17:13.240 --> 00:17:16.220 its stores in 1997. It's wild to think that the 00:17:16.220 --> 00:17:18.640 Pioneer went totally extinct, but the concept 00:17:18.640 --> 00:17:21.720 itself didn't die. It just mutated, adapted to 00:17:21.720 --> 00:17:24.099 the modern strip mall landscape, and exploded 00:17:24.099 --> 00:17:26.339 into the dollar stores we know today. Exploded 00:17:26.339 --> 00:17:29.180 is the only accurate word for it. By 2018, the 00:17:29.180 --> 00:17:32.359 dollar and variety store industry hit $77 billion 00:17:32.359 --> 00:17:35.829 in revenue. $77 billion? That's staggering. And 00:17:35.829 --> 00:17:38.349 to put that into a perspective that really makes 00:17:38.349 --> 00:17:42.269 you stop and think, by 2019, Dollar Tree actually 00:17:42.269 --> 00:17:45.210 had higher annual sales than Macy's. Wait, really? 00:17:45.579 --> 00:17:48.440 Dollar Tree outselling Macy's? Yes. I mean, think 00:17:48.440 --> 00:17:50.819 about the staggering reality of that metric. 00:17:51.380 --> 00:17:53.880 Macy's is selling high -end perfumes, designer 00:17:53.880 --> 00:17:57.960 coats, and luxury watches. The sheer unfathomable 00:17:57.960 --> 00:18:01.539 volume of $1 spatulas and mini diff soaps required 00:18:01.539 --> 00:18:03.900 to beat a high -end department store's revenue 00:18:03.900 --> 00:18:06.920 is mind -boggling. It really is. And we should 00:18:06.920 --> 00:18:09.000 make it clear to you, listening, this is not 00:18:09.000 --> 00:18:11.480 just an American retail phenomenon. The single 00:18:11.480 --> 00:18:14.789 -price model has conquered the globe. Yes. The 00:18:14.789 --> 00:18:17.250 single price model has proven incredibly adaptable 00:18:17.250 --> 00:18:19.549 to cultures all over the world. Take Japan, for 00:18:19.549 --> 00:18:22.490 example. They have the 100 yen shops dominated 00:18:22.490 --> 00:18:25.470 by the massive chain Daiso. Right. And this format 00:18:25.470 --> 00:18:28.089 didn't just casually appear. It proliferated 00:18:28.089 --> 00:18:31.789 around 2001, largely as an after effect of Japan's 00:18:31.789 --> 00:18:34.650 lost decade, which was a long, painful economic 00:18:34.650 --> 00:18:36.609 recession. I love the detail from the source 00:18:36.609 --> 00:18:38.369 about how Daiso actually started. They weren't 00:18:38.369 --> 00:18:40.269 even permanent brick and mortar stores at first. 00:18:40.329 --> 00:18:42.460 No, they weren't. They were literally vendors 00:18:42.460 --> 00:18:45.599 operating under temporary foldable tents near 00:18:45.599 --> 00:18:47.680 the entrances of supermarkets just trying to 00:18:47.680 --> 00:18:49.960 catch foot traffic. It was a completely grassroots 00:18:49.960 --> 00:18:52.819 retail movement born purely out of economic gloom 00:18:52.819 --> 00:18:55.700 and necessity. People needed cheap goods, and 00:18:55.700 --> 00:18:58.420 the tents provided a spark of joy and affordability. 00:18:59.400 --> 00:19:02.660 Today, Daiso has around 2 ,400 stores in Japan 00:19:02.660 --> 00:19:05.599 alone, and the demand is so high, they are opening 00:19:05.599 --> 00:19:08.240 about 40 new stores every single month globally. 00:19:08.460 --> 00:19:11.920 40 new stores a month? That is aggressive expansion. 00:19:12.539 --> 00:19:15.400 And the model becomes so deeply embedded in the 00:19:15.400 --> 00:19:17.680 culture, too. Look at Brazil. The Portuguese 00:19:17.680 --> 00:19:21.400 phrase, e noventa e nove, which translates directly 00:19:21.400 --> 00:19:24.519 to 1 .99, literally become a slang term in the 00:19:24.519 --> 00:19:27.180 culture. People use it to describe cheap, low 00:19:27.180 --> 00:19:29.960 -quality things, or even as an insult to describe 00:19:29.960 --> 00:19:32.640 an untrustworthy person. It shows how pervasive 00:19:32.640 --> 00:19:35.079 the pricing model is when it literally alters 00:19:35.079 --> 00:19:37.559 the common lexicon of a country. And we can't 00:19:37.559 --> 00:19:39.839 ignore China, where the variety store chain Maniso 00:19:39.839 --> 00:19:43.880 reached $1 .5 billion in revenue by 2016. They 00:19:43.880 --> 00:19:47.430 specialized the model. focusing on slightly higher 00:19:47.430 --> 00:19:51.390 aesthetics, cosmetics, sleek kitchenware, electronics, 00:19:51.769 --> 00:19:54.630 and they have expanded rapidly across multiple 00:19:54.630 --> 00:19:57.089 continents using the exact same psychological 00:19:57.089 --> 00:19:59.450 hooks. Okay, let's step back and look at the 00:19:59.450 --> 00:20:02.089 whole picture we've painted today. What started 00:20:02.089 --> 00:20:04.890 as a seemingly simple, highly -doubted, five 00:20:04.890 --> 00:20:07.930 -cent experiment in upstate New York in 1879 00:20:07.930 --> 00:20:11.789 has grown into an absolute marvel of margin manipulation. 00:20:12.089 --> 00:20:14.829 Absolutely. It's a bizarre cross -demographic 00:20:14.829 --> 00:20:16.950 phenomenon where Silicon Valley millionaires 00:20:16.950 --> 00:20:19.670 and folks on tight budgets are both hunting the 00:20:19.670 --> 00:20:22.430 aisles for the exact same dopamine hit of a perceived 00:20:22.430 --> 00:20:25.049 bargain. It has become a massive, controversial 00:20:25.049 --> 00:20:27.630 flashpoint for community infrastructure, dictating 00:20:27.630 --> 00:20:29.670 what entire neighborhoods have access to eat. 00:20:29.670 --> 00:20:32.660 Yeah. retail juggernaut that is quite literally 00:20:32.660 --> 00:20:35.000 outpacing traditional luxury department stores 00:20:35.000 --> 00:20:37.859 on the global stage. It really forces you to 00:20:37.859 --> 00:20:40.819 re -evaluate exactly what you are interacting 00:20:40.819 --> 00:20:43.259 with when you walk through those automatic doors. 00:20:43.619 --> 00:20:46.160 And this raises a vital important question, something 00:20:46.160 --> 00:20:48.140 for us to think about moving forward building 00:20:48.140 --> 00:20:49.880 on the history we just discussed. Let's hear 00:20:49.880 --> 00:20:52.339 it. Consider the famous Hema chain in the Netherlands. 00:20:52.900 --> 00:20:55.200 They started in the early 20th century with a 00:20:55.200 --> 00:20:58.049 strict standard pricing model. Everything in 00:20:58.049 --> 00:21:01.349 the store was either 10, 25, or 50 cents. OK. 00:21:01.430 --> 00:21:03.910 It was the core of their identity. But after 00:21:03.910 --> 00:21:07.650 World War II, Europe faced massive economic inflation. 00:21:08.450 --> 00:21:11.490 The economic reality shifted so drastically that 00:21:11.490 --> 00:21:13.509 the model simply could not be sustained without 00:21:13.509 --> 00:21:15.910 taking massive losses. So what did they do? HEMA 00:21:15.910 --> 00:21:18.470 had to make a choice, and they entirely abandoned 00:21:18.470 --> 00:21:20.809 their fixed standard pricing system to survive. 00:21:20.910 --> 00:21:23.190 Because the harsh math of the real world eventually 00:21:23.190 --> 00:21:25.250 broke the magic trick of the margin. Exactly. 00:21:25.529 --> 00:21:29.089 The illusionists ran out of cheap props. So with 00:21:29.089 --> 00:21:31.750 our modern global economy currently facing intense 00:21:31.750 --> 00:21:34.769 lingering inflation, wildly unpredictable supply 00:21:34.769 --> 00:21:37.809 chain shifts, and rising wholesale costs exactly 00:21:37.809 --> 00:21:40.609 like we saw with the exit dollar tree, you really 00:21:40.609 --> 00:21:43.130 have to wonder, are we currently witnessing the 00:21:43.130 --> 00:21:45.609 final days of the true single price store? When 00:21:45.609 --> 00:21:48.670 the 100 yen, one dollar, or one pound shop can 00:21:48.670 --> 00:21:50.970 no longer hold its namesake price point without 00:21:50.970 --> 00:21:53.190 completely collapsing its tiny profit margins, 00:21:53.710 --> 00:21:55.670 what new retail evolution is going to take its 00:21:55.670 --> 00:21:58.180 place in our communities? That is a phenomenal, 00:21:58.359 --> 00:22:00.839 provocative question to leave on. If the dollar 00:22:00.839 --> 00:22:03.160 store can't sell things for a dollar anymore, 00:22:03.339 --> 00:22:06.279 the entire ecosystem shifts again. Thank you 00:22:06.279 --> 00:22:08.579 so much for joining us on this deep dive. Next 00:22:08.579 --> 00:22:10.440 time you walk into one of those brightly lit 00:22:10.440 --> 00:22:13.380 aisles with the simple, innocent goal of buying 00:22:13.380 --> 00:22:16.400 a single roll in paper towels, well, maybe look 00:22:16.400 --> 00:22:18.119 twice at the price tag before you start filling 00:22:18.119 --> 00:22:20.019 your basket with magic tricks. We will catch 00:22:20.019 --> 00:22:20.880 you next time.