Variety Store - Economics

Economics

In economic terms, the pricing strategy of variety stores is inefficient as some items may actually be sold elsewhere at a lower price. However, this is offset by the efficiencies of a single-price structure; consumers accept potentially overpriced items. The pricing inefficiency becomes unacceptable at higher price points. Thus, there are no "100-dollar stores" where all items sell for $100; consumers expect to pay the correct amount, as inaccuracies result in significant dollar amounts.

In many developed countries, stock can be imported from nations with lower variable costs, due to factors such as lower minimum wages or taxation. Usually merchandise is imported by a general merchandise importer/wholesaler, then sold to the stores at a wholesale rate. Another source of stock is overruns, surplus items and out-of-date food products. Real Deals, a regional dollar store in the Syracuse, New York area, is stocked almost entirely with surplus goods such as these.

Although some people may link variety stores with low-income areas, this comparison is not always necessarily true. For example, Atherton, California has a variety store within its city limits, even though it has a median household income of over $200,000 a year.