3401 Gresham Lake Road Raleigh, North Carolina 27615 U.S.A. Telephone: (919) 876-6000 Fax: (919) 790-5349 Web site: http://www.vwstores.com

Private Company Founded: 1932 Employees: 7,500 Sales: $502 million (2003 est.) NAIC: 452111 Department Stores (Except Discount Department Stores)Privately held Variety Wholesalers, Inc. is a Raleigh, North Carolina-based operator of several discount retail chains, offering a wide variety of clothing and accessories, housewares, health and beauty aids, sporting goods, toys, snack foods, and furniture. All told, the company owns about 550 stores located in southeastern and Mid-Atlantic states, including Delaware, Maryland, Virginia, West Virginia, North Carolina, Kentucky, Tennessee, South Carolina, Georgia, Florida, Alabama, Mississippi, Arkansas, and Louisiana. The units are divided among three primary divisions. More than 200 stores in the 5,000- to 10,000-square-foot range make up the Super 10 Division. In addition to the Super 10 name, these stores operate as "Pope's," "Eagle," and "Super Dollar" stores. Slightly larger stores, 10,000 to 30,000 square feet, form the 150-plus Maxway Division, operating under the Maxway banner. Finally, the stores in the Rose's Division range in size from 30,000 to 70,000 square feet, all operating under the Rose's name. In addition, some Variety stores operate under the Bargain Town, Treasure Mart, and Value Mart Super Center names. The company is headed by the patriarch of the Pope family, John W. Pope, Sr., known as a keen retailer, able to buy struggling retail chains and turn them around, and a man not afraid to close failing stores. Business, North Carolina in a 1999 profile, described Pope as frugal: "Some might say downright cheap. His stores can go 15 or 20 years without a makeover." He shies away from larger markets, avoiding going head-to-head with Wal-Mart, for example, preferring instead areas that have minimum populations of 2,500 within one mile of a site, at least a 25 percent African-American population within five miles, and a median household income of less than $40,000. He also likes second- or third-generation shopping centers, especially ones anchored by a supermarket.History Dating to the 1930s

Variety traces its history to 1932 when John Pope's father, James Pope, himself the son of a dry-goods store owner, opened a five-and-dime store in Angier, North Carolina. John Pope learned the business as a child and was known to sleep under the counter on Saturday nights when his father kept the store open until midnight to attract the business of farming families who came in town for the movies and might stay to shop after the show was over. Pope also picked up some shrewdness from his father, who was quick to realize that as war approached in the early 1940s there were shortages to come, so he stockpiled goods in anticipation. As a result, he was able to open additional stores in North Carolina. When the United States entered the war, John Pope, despite being 17, was in his second year at the University of North Carolina, where he majored in Commerce. His father called him home in 1942 to take the place of a manager who had entered the military, but the younger Pope wanted to enlist in the service. He was not of age and his father refused to sign the permission form, and so in an act of defiance, John Pope convinced a woman at the store to forge his mother's name and he left home to join the Army Air Force. Although trained as a navigator he never saw action, was discharged in 1945, returned to college, and graduated in 1947.

Pace of Expansion Picking Up in the 1970s

After reaching the 50-store mark and generating about $8 million in annual sales, Variety began to accelerate its growth in the 1970s, as many of the small family-run dime store and variety store chains were now in the hands of second-generation owners, many of whom were Pope's friends and whose children were not interested in taking over the business. Pope would buy the chains and convert them to his lean way of doing things. In 1971, for the first time taking on debt to make a deal, he acquired the North Carolina chain of 52 Eagle Stores, which produced about $10 million in annual revenues, a move that effectively doubled Variety's size. Next, Pope bought 54 McCrory/United Stores in 1978, followed two years later by the acquisition of 188 Value Mart Stores, mostly located in Alabama, Louisiana, and Mississippi. In 1981 Variety added the 145 Super Dollar Stores, which relied on advertised sales to bring in customers. Many of Pope's other stores pursued a similar strategy, but again the retail landscape was changing, forcing Pope to adjust once more.

The legal requirement that retailers abide by the "manufacturer's suggested retail price" had started to be discarded in many states during the 1970s. As a result, the large chains could use their economies of scale and purchasing power to buy and sell merchandise at a discount, putting the squeeze on smaller players. After acquiring 55 P.H. Rose's variety stores in 1984, Variety was operating close to 400 stores under the Pope's, Value Mart, Super Dollar, and P.H. Rose's names. But the company was under pressure from discounters such as Wal-Mart which were sweeping across the South. The old formula of heavily advertising loss leader items at or below cost in the hope that customers would also buy profitable items as well was no longer working, forcing Pope to close stores in the wake of decreasing sales. Pope read in a trade journal about a California merchant who was taking a different approach, giving up on sales and instead offering all items at or below an everyday threshold price. After 1985 brought a 10 percent drop in sales for Variety, he decided to try out the new formula on 15 failing stores that he would have to close if they did not turn around soon. Now called Super 10, the stores priced everything at $10 or less. The experiment worked and over the next few years Pope applied the concept to other stores. To gain an edge he ceased advertising altogether, relying on the consistent pricing approach to bring back customers.