Many have heard of The Pareto Principle.Â Yet if you mention the 80/20 rule or 80/20 thinking, there will be a few of these same people who have heard it mentioned before.Â And a few will be able to define the rule in detail.Â Simply stated, the Pareto Principle (80/20 rule) says that in many situations 80% of the outcomes are generated by 20% of the actions.Â Learn it well.Â If you are about to open a dollar store there are many places it makes perfect sense to apply this principle to your business. Â
First, it is important to acknowledge these numbers are not that static.Â In other words, exactly 80% of the outcomes might turn out to be only 65% in some cases, and 85% in others.Â What is important is to recognize that the majority of the outcomes result from only 20% (The same idea applies here.Â It might be only 15% of the actions.Â It might also be 30% of the actions.) of the actions. Â
If you are about to open a dollar store think of the power knowing and applying this principle gives you.Â What if 80% of your dollar store sales are generated by only 20% of the items in your store?Â Soon after opening your business you will be able to check the actual data.Â You will know exactly the percentages.Â However, if you check the numbers you will discover a small percentage of the dollar store merchandise in your store is responsible for the vast majority of the dollar store sales.
With this knowledge you could begin focusing effort to reduce the cost of those fast selling dollar store merchandise items.Â Imagine adding 1or 2 cents to the dollar store profits on 80% of your dollar store sales.Â This information would also be a signal to never allow these all important items to run out.Â After all, these are the items that are bringing shoppers back into your store.Â This is the dollar store merchandise with the power to motivate shoppers to actual make a purchase.
Weâve only examined one example of applying the 80/20 rule when you open a dollar store.Â Think beyond dollar store sales.Â Think about knowing the 20% of dollar store merchandise that generates 80% of your dollar store profits.Â Or the most effective 20% of the advertising and promotion you do to build sales.Â The list just keeps growing. Â
To your dollar store success!