SARS may create headaches for ultra-discounters

forbes - Reuters ^ | , 05.20.03 | Wei Gu

[CathyRyan]

NEW YORK, May 20 (Reuters) - Dollar stores, which have performed well in the weak economy, could face a big hurdle in the coming months as the SARS crisis threatens to curtail the supply of cheap goods they purchase from China.

The stores, which sell everything from candies to cleansers under $1, count on China for 40 percent of their merchandise on average, said Davenport & Co.'s analyst David Campbell.

Dollar stores regularly send buyers there to search for better deals, but the outbreak of Severe Acute Respiratory Syndrome that has killed hundreds and inflicted thousands has frightened travelers away from the region.

Dollar Tree Stores Inc. (nasdaq: DLTR - news - people), which operates more than 2,300 stores, buys a variety of things from stationery to housewares from China.

"There is hardly anything that we don't buy from China," said Macon Brock, chief executive of Dollar Tree Stores Inc. (nasdaq: DLTR - news - people). "When you are not physically there, the things that you can shop for are limited."

Brock said Dollar Tree had to cancel a trip to China's largest trade fair in Guangdong last month due to SARS fears. Now it relies on the Internet, flown-in samples and telephones to consider merchandise. The company cannot afford to use video conferencing.

But even the best technology cannot replace the face-to- face contact that builds relationships, particularly if you are dealing with small shops in Asia. A lot of nuances may be lost in e-mails and the process may take longer when translation and time zone get in the way.

So far, SARS has not disrupted supplies from China, said Dollar Tree and Family Dollar Stores Inc. (nyse: FDO - news - people), partly because they have agents there. Management at 99 Cents Only Stores (nyse: FDO - news - people) said it is not affected because only 10 percent of its goods are from abroad.

"The ultra-discounters buy in bulks, if they already have a huge stock, you may not see much effect immediately," said Jay Swaminathan, a professor at the business school of University of North Carolina.

But he also noted that SARS may create future headaches for discounters who cut costs to the bone by trading flexibility for efficiency.

"When they are depleted of the stock, if the plants in China are shut down, then they may not be able to get the same cost efficiency elsewhere," Swaminathan said,

Dollar Tree said the company is adamant about continuing to buy from China and did not plan to diversify its suppliers.

"We are sold on China," said Brock. "We are not going to switch from China to South Africa because of SARS. China is still our favorite country."

Copyright 2003, Reuters News Service

[Nov3]

It isn't just going to cause the ultra discounters headaches, the ChiComs make everything.

[Domestic Church]

Well we're going to have to make do or see if Romania or some such place would like to fill this void. China isn't the only workforce on the planet.

[Dialup Llama]

>"We are sold on China," said Brock. "We are not going to switch from China to South Africa because of SARS. China is still our favorite country."

Thought the US might be his favorite country, but I guess not.

[dc-zoo]

I believe he's speaking from his bu**.. pocketbook.

[gcruse]

This will have a serious effect
on the local Pick and Pay, too.
Or was that Scratch and Sniff....?

[aristeides]

Ping.

[AmericanInTokyo]

For the life of me, I cannot truly imagine anything more embarrassing than to be seen going in or out of a "Dollar Store", let alone being photographed doing that and having it appear in the local papers.

[Prince Charles]

My cleaning lady swears by Dollar General -- she is able to buy name-brand supplies at least half off the regular street price.

[I'll be your Huckleberry]

There is a joke in Nevada, where the dollar stores are huge and almost on every block.

You know why I shop at the Dollar Store?

No why?

Because there isn't a $0.49 store.

[I'll be your Huckleberry]

Was there a thread on Sars that just dissapeared? I was reading about the Sierratimes and SARS451, 321 or some such being removed.

Went for an ice cold adult beverage, refreshed and it was all gone.

I think that story about sars in Vallejo is bunk, but the Sierratimes is a stand-up rag.

The editor is former milita and has a very good rep in these parts.

But what is the deal with all the aliases, and the disappering threads?

Thanks

Huck

[Domestic Church]

Great place to bring little kids...5 candy bars for a buck and lots of cheap toys for the beach.

[aristeides]

Yes, there was that thread, and it has been deleted. A number of posters seem to have been banned. I have no idea what their offense was.

[blam]

" A number of posters seem to have been banned."

Any of our regulars on the SARS threads?

[I'll be your Huckleberry]

Votive candles 4 for a buck,

4 AA batteries for a buck,

etc.

[dc-zoo]

I didn't get a chance to read that latest post either before it was deleted. Was it about the vallejo story?

[I'll be your Huckleberry]

Thanks,

Is it bad behavior or subject matter? Never seen this before

Can someone fill me in on what is going on? I haven't been following the threads too much lately. But the idea of Sars posters getting banned, is just odd enough to get my attention.

[TaxRelief]

This much we do know: they were posting bogus info and stirring up the pot. If Sierra times has been sucked in by Astraea Kelly, Free Republic has not. She is a labour organizer, an active A.N.S.W.E.R. member and she works with Green Peace and the International Solidarity Movement.

It is a shame that the Sierra Times did not do their research.

[riri]

Any of our regulars on the SARS threads?

That agitator riri. Good riddance.LOL.

No, some person sars321 and watchman123.

[I'll be your Huckleberry]

Thanks,

That story is Boooogus, no way you could keep a lid on that info around here. Too many anti-goverment types with e-mail.

Sorry to hear that JJ got snookered. His wife is a big wheel in the Lib. party, so maybe that was a factor.