Low-budget retailers cashing in on recession


December 13, 1990|By Michelle Singletary | Michelle Singletary,Evening Sun Staff

As Carolyn Lowery rang up purchases for customers, she had to keep repeating one thing: "Yes, everything is just a buck."

Well, almost everything. Just two gift sections at Just a Buck have merchandise bearing more than the usual $1 price tag. But 95 percent of the merchandise sells for a dollar.

One-price stores, popular in outlet centers, have moved closer to the city and are popping up in suburban malls. The retail concept is simple -- everything in the store sells for one low price or less.

"It's a retail concept that came out of everyday low pricing," said Stephen Sibert, director of member services and communications for the Washington, D.C.-based International Mass Retail Association.

Thomas Pappagallo converted his family's retail stores about three years ago to "Gallo's One Price Clothing $10 and Under." He heads the family-owned business.

Pappagallo, who has also been in the wholesale business for 25 years, said he saw there was room for growth in the one-price market.

He has 10 stores in Maryland, six in the Baltimore area, and expects to open two to three more next year.

Pappagallo said sales are up 25 percent from a year ago.

"We don't have the debt service and overhead like the major retailers," he said. "In an economic slowdown, you have to be on a solid foundation. And, we offer value for a good price."

Andy Sprainis and his wife, Frances, recently opened two Just a Buck stores. The couple has a store in Westview Mall and one in Mt. Clare Junction.

"The fact that the economy is upside down helps," Sprainis said. "Dollar stores are growing."

While there are a number of stores in the area with the word "dollar" in their name, only a few actually sell items for a just a dollar.

Dollar Tree, which does sells everything for a dollar, has eight stores in Maryland. The chain, which is part of K&K Toys Inc. based in Norfolk, Va., has grown from just five stores to 141 east of the Mississippi.

Tom Bowyer, director of sales and operation, said Dollar Tree expects to add 30 to 40 new stores a year.

"We, as anyone else, are not recession-proof, but many more people buy dollar items," Bowyer said. "It's this time of year and when times are tougher when we are appreciated."

In fact, with major retailers paring their inventory and canceling orders because of slow sales due to the economic downturn, Dollar Tree customers actually benefit, Bowyer said.

"The products we can buy have become better and better," he said.

One-price stores get their merchandise in a variety of ways. Items are bought from wholesalers or straight from manufacturers due to overstocks, closeouts, discontinued items or late shipments that have been refused by the intended purchaser.

Pauline Watson, 64, was amazed at the quality of items at Just a Buck.

"I just thought things wouldn't be nice for just a dollar," Watson said.

After her $8 purchase, Watson said, she was a believer.

"There were a lot of cute things. It was better than I thought it would be," she said.

"The key to us succeeding is to carry the better merchandise," Sprainis said.

Both Bowyer of Dollar Tree and Sprainis said items cost them 65 cents each on the average. Many of the same items carry a 200 to 300 percent markup in regular retail stores.

Sprainis said he hopes the one-price concept will work by increasing volume. He said he will need to make $500,000 in sales in a year to succeed, given the small profit margin.

Pappagallo said the one-price policy saves him money because salespeople are spending less time pricing items.

"One-price selling is a concept that takes a lot to work," he said.

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