Dollar Store Inc.: Booming Business of Being Cheap

Family Dollar CEO Howard Levine talks about how dollar stores have thrived in a down economy.
5:04 | 12/27/12

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Transcript for Dollar Store Inc.: Booming Business of Being Cheap
moran.Is year's holiday gift giving frenzy is drawing to a close. For many of us, that means this season's spending remorse is sinking in. The average american spent an estimated $700 during the holidays this year, so tonight, we wanted to bring you an inside look at the bargain stores that could help out with your wallet rehab. Abc's ryan owens brings us inside the booming business of being cheap. Reporter: They're opening their faster than new starbucks. I like it because it's cheaper. Reporter: There are now more dollar stores in the united states than drugstores. Since the prices are so good, it's like why not? You can get more stuff for cheaper. Reporter: A $56 billion industry. I think we can double the size of our chain within this country. Reporter: Each pin on this map represents one family dollar store. Howard levine is the ceo of that chain. Tons of growth here. This is probably a thousand-store state. Reporter: Right now he oversees an empire of how many stores? Right around 7,550. Reporter: Are you sensitive to the charge that you're the ceo of one of the cheap stores? Cheap is bad? No, somebody called me cheap, I take that as a compliment. That means we're looking for value, we don't overpay for stuff. Reporter: Cheap is working. Three dollar chains, family dollar, dollar general, and dollar tree are fortune 500 companies. Another chain, 99 cents only, is eyeing real estate on ritzy rodeo drive. 119.05. Reporter: Dollar stores have been expanding while the rest of the economy has been receding. My friends say I'm miserable, but you must love this economy, and, you know, that's not really the case. We would much prefer a strong economy. When people have jobs, they spend money. We do pretty good in tough times, but we do very well in good times as well. Reporter: Family dollar has been doing well for more than a half century. Levine's father opened the first store in charlotte, north carolina, in 1959. In the beginning, family dollar sold only things that cost a buck. But they abandoned that years ago. Today, roughly 90% of their products are less than $10. About a third of everything they sell is not made in america. What do you say about that, that all of this stuff comes from china? Let's see where this jacket is made. China, look at that. You've got go where you can get the value and where they have the workmanship and the factories to do it. You know, that's the nature of the business. Reporter: So you're not going to apologize for that? No. Reporter: So there's stuff traveling above our heads all ovhe place. Yes. It's an extremely important part of our business to make sure we have a good supply chain. Reporter: Levine took us inside one of his distribution centers, a speeding array of sorting machines and suconveyer belts. There's little room for error because it's the cents that really matter. After taxes, if you can make five cents on every dollar you sell, the pennys are important to us. It's amazing. Reporter: Being fast and efficient are one of the secrets to their success. The winning formula begins in tiny towns, underserved communities walmart and target wouldn't give a second look. They garble up cheap real estate, empty buildings other retailers have left behind. Then they hire a small work force. Each store may have only two people working at a time. There's almost no advertising. No fancy commercials. An in-store circular lists all the deals. And their final secret, a laser-like focus on the customer. You design the store around her. Reporter: In fact, every other word out of president mike bloom's mouth is a single pronoun. We needed to get what she needs it. She's out buying what she needs. Reporter: You keep saying she. Who is she? 87% of our customers are women. We think about her all the time. Customer, customer, customer. Reporter: She is the noun in just about all of your sentences. To me it's dna. You're getting four times as much for 50 cents less. Reporter: Bloom spent three decades working for cvs. He noticed family dollar's cheap corporate culture in day one. I'd sit in meetings, look at presentations. I would always miss half the presentation. I was like, it doesn't make sense, because they print on two slides. It's automatic. They print on two sides. This is brilliant. How are you, sir? Good to see you. Reporter: Howard levine is already a millionaire many times over, but 50 years after he walked these aisles with his dad, he says he still shops here. This is what I bought. In fact, I'll probably sleep in these tonight. 8? I mean, unbelievable. Where else can you get a value like this? Reporter: I'm ryan owens for "nightline" in matthews, north carolina.

This transcript has been automatically generated and may not be 100% accurate.

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