Variety stores sell low-cost items such as household goods, toys, and snacks. They keep prices low by selling private label or generic products, gray market goods, and discontinued items. The success of these stores is based on buying and selling huge quantities of goods at heavily discounted prices and pricing some items higher than regular retailers. The original model was the five-and-ten store, which was replaced by dollar stores in the late 1900s.
A variety store sells a variety of small, low-cost items that are popular with consumers. The offered goods may have different prices or all items may have the same price. Items for sale in these stores typically include household items, toys, cleaning supplies, snacks, and office supplies. Depending on the physical size of the store, more variety of items may be offered, but all products are generally considered good values for the consumer.
The original model for the variety store was the five-and-ten store, often called dimestores. These retailers sprung up in the late 1800s, and no item for sale cost more than a dime. Dimestores have been found in almost every first world country.
By 1900 this concept was no longer viable as prices rose with industrialization and the free market. The name, however, stuck until the late 1900s, when the traditional dimestore was supplanted almost worldwide by dollar stores. Similar to dimestores of the past, many dollar stores quickly changed their policy of pricing each item down to one dollar. Most offer heavily discounted products of which many, but not all, cost a dollar.
The typical variety store is able to keep prices low based on several factors. A large percentage of brands sold are often private label or generic products. These are often popular products made with less expensive materials and cheaper manufacturing processes than comparable products sold at higher retail prices.
Other items may be gray market goods. This category includes products that have been obtained through legal but often unauthorized or unofficial distribution channels. These items are commonly produced originally for a foreign market which sells them to third parties based on poor sales in the original market.
Items that are discontinued are also commonly found in a variety store. While they are generally free from flaws, they can be slow sellers based on their connection to a past event such as a movie opening or a past international sporting event. Music CDs and DVDs that have not done well in traditional retail markets are also often found in discount stores.
The economic success of a typical variety store is often based on two factors. Buying and selling huge quantities of goods at heavily discounted prices offers a small profit per item which is offset by sales volume. The second factor that often contributes to the store’s profit margin is pricing a substantial number of items at higher prices than regular retailers. These goods are commonly bought by consumers who perceive the prices as bargains based on the other heavily discounted items in the store.
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