How dollar tree works
The Dollar Tree business model
- Find out how Dollar Tree have stayed in business since 1986
- What is it about the Dollar Tree business model that drives success?
- Can Dollar Tree keep up the success story?
What’s kept Dollar Tree (NASDAQ: DLTR) in business for so long is how they have been able to sell all of their inventory at a $1 price point.
With many low-income communities throughout the nation, this store has been able to market its products based on low prices and convenience.
Dollar Tree has been in business for over 3 decades and is the only true dollar store chain left in the country where everything in their inventory is sold for just $1 each. Their stores carry pantry items, perishable foods, frozen foods, cleaning supplies, beauty, and personal care products, craft supplies, party supplies, and so much more.
Coming up next
- What does Dollar Tree do?
- How does Dollar Tree work?
- How Dollar Tree makes money
- Future growth engine
What does Dollar Tree do?
Dollar Tree’s claim to fame is that their entire inventory is sold at $1 each. You can find almost anything you need in a Dollar Tree store that you would normally find in a grocery store only the inventory is sold for much cheaper.
While most inventory is private label, if you see any name-brand items that are not normally carried at your local Dollar Tree, this is known as a special buy. Dollar Tree will usually buy out almost expired goods from other companies so that they can be sold cheaply and still have a profit made on them when other stores do not want the inventory.
How does Dollar Tree work?
Dollar Tree stores make it convenient for their customers to shop and find everything they need by just walking down a few aisles because their stores are at least 8,000 square feet in size.
Since Dollar Tree locations are even smaller than a Walmart superstore, it is not as difficult for customers to find what they need and they could get most of their needs and wants to be met at Dollar Tree. Therefore, people will make larger purchases because of the number of items they are picking up at a time even at the $1 price point.
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How Dollar Tree makes money
Dollar Tree makes its money by selling inventory in smaller sizes, selling private label products, locating themselves near low-income communities, and keeping staff at a minimum.
Inventory in smaller sizes
People are tricked into thinking that just because a product is $1 at Dollar Tree that they are getting a great deal. However, many Dollar Tree products have a smaller size than what you find in a standard grocery store so that they can be sold at the $1 price point. Therefore, people will have to purchase more quantities of an item such as aluminum foil or sandwich bags to get the full amount they desire.
Selling private label products
There are not as many name-brand items in Dollar Tree because they want to showcase more of their private label items that were made cheaper than name-brand items. More cheaply made products mean they will garner a higher profit margin on their merchandise.
Locating near low-income communities
Dollar Trees strategically locate themselves in low-income communities because more people who are on a tighter budget will choose to visit a Dollar Tree rather than a big box grocery store such as Walmart or Target to fulfill their needs.
Keeping staff at a minimum
You may wonder why you may see the same 3-4 people at your local Dollar Tree almost every time you visit. Dollar Tree stores keep staffing to a minimum to deliver you the convenient low prices of everything at $1 each. This may also be the reason that the lines get very long and a stock person in the back will have to control the customer line.
Future growth engine
Dollar Tree locations have rolled out the Dollar Tree Plus section in select locations throughout the country that features home goods items priced $2 and up. As they continue to implement this section in all their locations, they can increase revenue to rival that of their competitor, Dollar General.
Dollar Tree may be increasing their prices to a little above $1 to be able to pay employees fairer wages and to increase the revenue they have lost the past couple of years as Dollar General has taken the lead in their industry.
Increasing their prices may not make much of a difference in their customer base as long as it’s still within the $1 to $1.50 price point.
Dollar General is the top competitor against Dollar Tree. Since Dollar General has products at different price points from 50 cents to upwards of $20 or more, they have more ability to make revenue with the variety of inventory that they have in stock for their customers.
Dollar Tree only has a limited inventory based on what they can feasibly sell for $1 because there is just some inventory that they cannot sell for that cheap. Hence, this limits much of the perishable food goods that Dollar Tree offers. This is why you may see eggs for $1 but no gallons of milk because a store cannot feasibly sell a gallon of milk for $1. However, shelf-stable milk can easily be acquired for $1.
How Dollar Stores Really Make Their Money
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By Jessica A. Scott/Updated: Nov. 9, 2020 8:29 am EDT
There is no store more convenient than a dollar store. Even people who don't have much money can go into a dollar store and find everything from toiletries to canned foods to children's toys and school supplies, all for a dollar or less (with a few exceptions at the still-super-cheap Dollar General chain). It's quicker than a trip to the grocery store, gives you more options than a convenience store, and it's seemingly much cheaper than both.
Both Dollar General and Dollar Tree, the two largest dollar store chains in the country, each had around 15,000 store locations in the United States in 2018, and that number has only been growing since — as have sales. In the first six months of 2019, Dollar Tree (which also owns Family Dollar as of 2015) saw an increase of $12.2 million in gross profits, earning $3.38 billion. Dollar General saw the same kind of results, earning an annual revenue of $25.62 billion in 2019 alone. Every year these stores see higher and higher earnings, but how can a store that seems like it is basically giving things away possibly turn itself into a multi-billion-dollar enterprise? The answer is simple: that dollar isn't always the great deal it appears to be. This is how dollar stores really make their money.
Convenience is key at dollar stores
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In America, it might seem like the economy is always going up and going down, as are things like the unemployment rate. High or low, though, you can still count on people to flock to dollar stores because they have the one thing everyone loves: convenience. Sales for Dollar General are always on the upswing, with the chain seeing an increase of 3.7 percent between 2017 and 2018 regardless of the state of the economy. Even though the unemployment rate fell to less than four percent, "We have seen no sign of trade out or trade up from our core customers," said chief executive of Dollar General, Todd Vasos. "Even in a good economy, [they are] still looking for value and convenience."
So, basically, no matter how much money people have, they still want something that bigger grocery stores can't give them. Dollar stores are not just convenient because their items are cheaper, but also because there seems to be one on every corner (especially in the lower-income parts of town) making them perfect for a quick fill-in trip between your weekly grocery runs. These stores are also typically smaller than the ones in a big chain like Walmart, which means that you can usually get in and out with your emergency bag of dog food or supplies for your kid's art project in just a couple of minutes. The fact that most people are on to this, means dollar stores are always making money.
The location of dollar stores keep the money rolling in
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It's common knowledge that the success of a business is largely based on its location. If you aren't in a place where you can offer something that the local community needs, you aren't going to have much of a clientele. This is why Dollar Tree and Dollar General are mostly located in areas where people with a lower income level reside, and/or in which big box stores aren't easily accessible.
According to CNN Business, 75 percent of Dollar General stores are located in towns that have less than 20,000 people. The chain targets sparsely populated rural areas where it can be the only game in town when it comes to buying food or other supplies. In most cases, the closest grocery store is more than 15 or 20 miles away, making the dollar store a much more convenient option.
Dollar General also strives to put locations in areas that are known as "food deserts." These areas — which aren't just limited to rural towns, but may also include underserved urban areas — are places in which fresh food is not readily available. To take advantage of this, dollar stores offer snacks and are even working to expand their fresh food sections, giving people even more reason to shop there. More customers means more dollars, and those dollars soon add up to big bucks.
Dollar stores target low-income customers
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It is no secret that a store that sells most items for $1 was made in the interest of appealing to customers who don't have a ton of money. According to Babson Centennial, the families of most dollar store shoppers make less than $50,000 per year, which makes them "much more price-sensitive" than wealthier people. These shoppers don't just want a better deal than they can find at other stores, they need one.
Dollar stores capitalize on this need by opening stores in lower-income areas and presenting themselves as a cheaper and more convenient option. If you don't have to drive half an hour to get to a full-size grocery store, you don't spend as much money on gas, which helps to save a lot of money in the long run. The savings only continue when you arrive at the store and find thousands of items offered at a much lower price point than competitors.
For this reason, dollar stores quickly began to beat out even the great and powerful Walmart chain when it came to sales, prompting Walmart to attempt to compete by opening its own line of "small box stores" called Neighborhood Markets. Unfortunately for them, though, dollar stores still crushed these new, perhaps healthier alternatives, and have now very nearly taken over the entire grocery business in some parts of the U. S.
The prices at dollar stores aren't always a deal
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It doesn't matter how rich or poor you are: a dollar for a bottle of shampoo sounds like an awesome deal. Before you start filling up your cart, though, there's something you should know. That dollar is not always as good a value as it seems.
According to a report published on AOL.com, "Just because a store has 'dollar' in its name doesn't mean it's less expensive than the competition. In fact, it's likely that you're paying more at a dollar store than you would at Walmart or Target for the same item." Stores like Dollar Tree and Dollar General count on the customer being distracted by the appearance of a discount and not taking the time to check the difference between the sizes and the quality of the items at their stores. Because of this, unsuspecting customers end up actually paying more for an item than they would have somewhere else, and it usually doesn't last nearly as long.
In reality, it is grocery stores that offer the highest discounts, although they see lower earnings overall. For every dollar spent by a customer at Dollar Tree, the company makes a profit of $0.35. Walmart, for example, makes only $0.24 per dollar. This is because the items at dollar stores cost less to manufacture, and the company isn't losing any money by keeping them on "sale" for just a dollar.
Smaller sizes give the illusion of a discount at dollar stores
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The number one best trick carried out by dollar stores is that they are actually giving you less for your money. You might think you found a great deal by buying a box of aluminum foil for $1, but check the length of the roll. According to one of several analyses compiled by HowStuffWorks.com, the foil you buy at Dollar Tree is 15 feet long, while a $4.06 roll at Walmart contains 75 feet of foil (prices may vary by location) — meaning at Walmart you're getting over 18 feet per $1. The same applies to things like milk (you get a 16-ounce bottle for $1, which means you would have paid a whopping $8 for an entire gallon), raisins ($1 for a 4.5-ounce bag instead of 72 ounces for around $10.59 at a grocery store), and flour ($1 for two pounds instead of around $2 for five at another store).
As if this weren't bad enough, you should know that according to Macon Brock, one of the founders of Dollar Tree, dollar store owners are basically counting on people to not think so they don't notice what's going on behind the curtain. "When a customer walked into our store," he wrote in his book, "she could shut off her brain. She didn't have to think, didn't have to calculate how much she was spending. All she had to do was count – 'One, two, three, four, five, six. I have six items and I have six dollars. I can buy this.'"
Dollar stores sell cheaply made items
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At a dollar store, you get what you pay for. While a dollar might be a deal for some items, you can't expect something long-lasting and high-quality if you can pay for it with loose change. Whether it's Dollar General, Dollar Tree, or any other chain of dollar stores, one of the biggest ways that the business saves money is by selling items that are made of cheap, flimsy materials.
According to the Washington Post, children's toys are one of the worst things you can buy at a dollar store. They are made with tiny pieces that come off and can be choked on, and they fall apart surprisingly quickly because they are made of parts that cost next to nothing to put together. Electronics and things like power strips are a bad idea too. After one use (or 20), they could malfunction and ruin your devices because they weren't made with the proper materials and safety standards.
Most people don't expect their dollar store purchases to last forever, and when one thing breaks, they just go back and get a replacement for another dollar, which means more money in the dollar store's pocket. Instead of buying a higher-quality item at another store for $5 once, they end up buying the same, cheaply made item ten times at Dollar Tree and spending twice as much without noticing, which is all part of the company's plan.
Dollar stores are strategically designed
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If you've ever been inside a dollar store, you will have noticed that it's much smaller and more compact than a typical grocery store. This is no accident. According to Business Insider, a store Dollar Tree is usually small, with an average size of just 8,000 to 12,000 square feet. They say that's about one-eighteenth of the size of the average Walmart — so it's not just a small difference. The stores are designed this way so that you can easily go through the entire store in just a matter of minutes, making it more likely that you can find something you need or want without much searching.
There is also a method to the way the aisles are arranged that affects what shoppers buy. Typically, seasonal items like Christmas decorations, party favors, or summery cups and pinwheels meet you as soon as you walk in the door, tempting you with the stores' newest inventory right off the bat. The products that shoppers buy most frequently, such as food or children's toys, are placed in the back, meaning that you have to walk through the entire store — and past all the other tempting deals — to get to them. This set-up has been proven to sell more products because people leave with a lot more than what they came in to get.
Hiring fewer employees means less money going out at dollar stores
Another way that dollar stores can make so much money is that they don't have to spend much money. The average small, independent grocery store employs around 14 people, but the average Dollar Tree and Dollar General only employ eight. Dollar stores are typically smaller and don't see the huge rush that other retailers do, so they can afford to get by with only a handful of workers per shift. As a result, they don't have as many employees to pay and provide insurance and benefits for, so they don't see as much money going out as other stores do.
The downside to this is that most dollar stores are located in areas in which people are struggling economically. While the arrival of a new Walmart, Meijer, or Target in town could mean many more jobs for the locals, a new Dollar Tree really doesn't. So while the chain itself is saving money and raking in more and more of it, this money isn't being spread out into the community, which is one of the major complaints about this type of establishment.
Producing and selling private label items costs dollar stores less money
According to Business Insider, private labels are dollar stores' "secret weapon." Most big box stores offer private label products too, but this practice is especially lucrative for stores like Dollar General and Dollar Tree. A private label is usually one owned by the store, and its products can typically be identified as "store brand. " Dollar General, for example, offers home goods branded as "DG Home" and over-the-counter medicines as "DG Health." The Dollar Tree disguises their private labels a bit more, choosing to go with company names like "Sassy + Chic" for makeup and "Supreme Tradition" spices.
These private label items cost less to manufacture, and therefore appear on the shelves with a price that is less than half of what name brands charge for the same item. At one point in time, this strategy didn't work, as people were loyal to specific brands because they knew they would get the quality they were looking for. As the economy shifted, though, and the quality of even brand name products changed, people began to grow more "apathetic" to brands. Now, thanks in part to millennials making up a large portion of the shopping public, people are less focused on which brand is best and are more focused on things like price and environmental impact, meaning that private labels, generics, and unknown brands have quickly become the most appealing options. When people are buying their store brands, dollar stores are raking in a lot more profit.
Dollar stores are squeezing out grocery stores (and getting paid to do it)
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Over the past eight years, dollar stores have seen explosive growth across the United States, and show no signs of slowing down. Part of the reason that this is happening — and that these companies bring in so much money per year — is that dollar stores are pushing out grocery stores, especially locally owned ones. Small grocery stores just can't compete with the low prices and the ultra-convenience of a dollar store, so they often find that they are losing customers to this thrifty competitor.
While this is bad in and of itself, there is more to the story. Not only are dollar stores purposely squeezing out independent and locally owned grocery stores (full of healthier food choices and actual better deals), but they are getting paid by the government to do it. In 2016, Dollar General received around $1 million in incentives through the National Grid programs and around $750,000 from New York's "small cities grant program." They also received breaks on both sales and property taxes to the tune of more than $10 million, all in an effort to keep the stores thriving and expanding in the state. The hope behind this is that more Dollar General stores will mean more jobs for locals and a boost to the economy so that more people will move to the area, even if it means the loss of grocery stores and other local businesses.
Dollar stores are causing "economic distress"
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Above all, the main way that dollar stores make money is that they offer a way for low-income people to get the everyday items they need for an affordable price. For this reason, the large majority of dollar stores are located in areas that see a lot of "economic distress." Unfortunately, dollar stores don't really help to fight economic distress — they cause more of it.
According to Fast Company, dollar stores deliberately target "some of the country's most vulnerable communities," including rural areas, largely black neighborhoods, small towns, and urban areas. Once they set up shop, they wipe out all competition in the form of grocery stores and independent small businesses, making them the only choice when it comes to food and other necessities. While the dollar store itself makes millions off these communities, the people in them are left with no healthy food options and no locally owned businesses, resulting in even less income for the already-stressed economic environment. In the words of Marie Donahue and Stacey Mitchell of the Institute for Local Self-Reliance, "Although dollar stores sometimes fill a need in places that lack basic retail services, there's growing evidence that these stores are not merely a byproduct of economic distress. They're a cause of it."
Dollar stores make money because they offer something people think they can't get anywhere else and because of this, they are taking much more than people's dollars.
Dollar tree: signs and superstitions, where to put it
If you are interested in the dollar tree, signs and superstitions associated with it, then you are the owner of this amazing plant or you have decided to give it to someone as a gift.
Zamioculcas is a desert plant of the Aroid family, capable of accumulating moisture in its leaves. It grows on the African continent and feels great in hot climates. But even in room conditions, a small tree feels good. In addition, it is believed that the dollar tree is able to mystically increase the income of its owner. What signs refer to this plant?
Dollar tree: signs
Watching the growth and flowering of Zamioculcas, you can make your own money forecast for several months in advance. Signs of a dollar tree include the following information:
- Abundant flowering - unprecedented profit or inheritance.
- A stunted state is a harbinger of ruin.
- Stable growth - a systematic increase in income.
Such simple observations will help you know the future of your finances, as well as take timely action if something goes wrong.
Rules of the Dollar Tree
For this plant to work for you to its full potential, it must be given to you. When you accept a tree as a gift, be sure to pay a few coins for it. This is the custom associated with the tree. And the coins paid for the gift balance the energies.
You can buy such a plant yourself. But for the manifestation of its magical properties, you will have to appease the plant. A dollar tree thrives if its owner often says words of gratitude to it.
At Christmas and New Year Zamiokulkas is decorated with chocolate or real money. Coins are hung from laces or ropes to branches, and a small dragon figurine is placed on top of the plant. In addition to the dragon, you can also place a compact money frog there.
It is best to place the tree in the house in the southeast. There are the right energies that can activate cash flows. It is not advisable to give a pot with a young dollar tree to others. Only a mature plant is brought as a gift. They also do not give shoots from their copy. It is believed that in this way it is possible to give one's wealth to another person.
A money plant can only be transplanted on a waxing moon. This must be done carefully, being in a good mood. A tree transplanted to the waning moon will bring negativity into the house. And, on the contrary, it will worsen the financial situation.
Thus, the dollar tree, about which signs and superstitions have ancient roots, grows best where it is taken care of and watered regularly.
How does a tree warn of a possible ruin?
When a person takes good care of his plant, and it begins to turn yellow and wither, then, indeed, one should expect problems with money.
The degree of wilting of the dollar tree is directly related to the owner's finances. Therefore, the plant can predict both minor troubles and complete bankruptcy.
What can be done to enhance the effect?
Want to get the most out of the dollar tree? Then read all about proper care for him. And to activate the monetary energy, tie a red ribbon on the trunk.
Whole banknotes can also be placed on the crown of the plant. You can hang money from different countries on branches. Banknotes for a tree are carefully twisted into tubes and a pyramid is built from them next to the plant. Sometimes gold and silver ornaments are hung on a tree. This method of attracting money works especially well when there is already a dragon figurine on the dollar tree.
Such a ritual helps to protect savings from unnecessary spending, theft and other problems. If you just want to attract and spend money, then you need to change one bill for another as often as possible.
Zamioculcas is a proven magical way to help you become richer. Of course, he will not relieve you of the need to work, but it will greatly facilitate relations with money for a person.
Such a plant must have one owner. For each family member, you can purchase a separate tree. Then the effect of its cultivation will be really noticeable.
A well-groomed dollar tree, as well as omens and superstitions associated with it, are known all over the world. From Africa to colder climates, the money-raising tree is a favorite of many horticulturalists. It can be a great gift, a decoration for any interior, a simple indoor plant, or a magical tool to attract success. What will this plant be like? The answer depends only on its owner. Those properties that the dollar tree is endowed with by the people only work with the right and scrupulous approach.
Zamioculcas or dollar tree: omens and superstitions
Zamioculcas is a houseplant, so loved by flower growers for its unpretentiousness and external beauty. The flower belongs to the aroid family, its homeland is the tropical jungle of Africa. Among interior designers and just lovers, the plant is very popular; they are often decorated with living rooms and office spaces.
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- Signs and superstitions
- Why is the flower called the dollar tree?
- Why is it called "women's happiness"?
- A flower of celibacy and a husband?
- What does a plant mean in Feng Shui?
- Is it possible to keep a flower at home?
- Why bloom?
- Zamioculkas is crying, what does this mean?
- Useful video
Signs and superstitions
Now there are many different superstitions regarding this plant, let's consider some of them.
Why is the flower called the dollar tree?
People also call Zamioculcas the money or dollar tree. People sincerely believe that this plant is able to attract money and wealth. In this regard, there are a lot of hello and superstitions.
According to popular belief, in order for the dollar tree to really work effectively, he needs to be treated like a human. A tropical flower loves water very much, it needs to be watered as the earthen clod dries up and at this time you should talk affectionately with it, ask for wealth, prosperity. Moreover, you need to ask for his help on Tuesdays with the growing moon.
There is a whole ritual for attracting money to the house with the help of Zamiokulkas. You need to take a dollar bill, roll it into a conical pyramid. Attach the top of the pyramid to the flower and constantly make sure that the bill does not fall. You can put a cent coin in the tray of the pot.
There is also a belief that the plant needs special monetary water. A small amount of coins should be poured with cold water and let the liquid brew for two days. Water the dollar tree with this magic liquid. Coins should remain in the container until the water runs out.
Attention! Zamioculcas leaves contain poisonous cell sap. Therefore, when caring for the plant, be careful, work only with gloves. If there are small children in the house who cannot explain the danger of this flower, then it is better not to keep it in the house yet.
Be careful when handling the plant - Zamioculcas contains poisonous cell sap. Wear gloves.
Another sign is related to the fact that having received such a flower as a gift, you must definitely give the donor a few coins. Then it will really bring wealth.
Why is it called "women's happiness"?
Why women's happiness? Perhaps this name is associated with the shape of the flower: in flowering, it has the shape of a male member.
In addition, Zamioculcas, with proper care, can make a woman happy. Moreover, a prerequisite for this - flower must be donated, not purchased. The purchased plant, on the contrary, will bring failure in love affairs and loneliness.
And it is believed that only a flowering plant can attract a man to the house, which happens very rarely. It is considered a very bad omen for a woman if the plant withered.
In no case should you throw it away, you must either cure it or buy another one of the same flower. A healthy zamiokulkas will share its energy with a fading one.
A flower of celibacy and a husband?
But if some believe that the plant brings female happiness, then others consider it a husband. There are beliefs that a plant can even give a woman a crown of celibacy.
This belief appeared among the people, because zamiokulkas is similar to another plant called muzhegon - spathiphyllum. In science, of course, this fact has not been confirmed, but the mentality of the people is so arranged - to believe in legends and sayings.
That is why the following signs exist among the people:
- if the plant is in the house of an unmarried girl, she will never marry;
- only a given flower has magical properties and can bring happiness, love, and wealth to the house;
- if zamioculcas grows luxuriantly, does not get sick and even blooms - this is to well-being and happiness.
What does a plant mean in Feng Shui?
The Chinese Feng Shui philosophy also considers Zamioculcas as a way to attract the energy of wealth. According to Chinese teachings, the location of the plant in the house and proper care for it are very important.
A flower pot is best placed in the south-eastern part of the house. You need to plant a plant only in a new land, you can not use a pot with soil in which another flower has already grown.
When planting, it is good to leave a few coins in the ground, which will exude monetary energy and have a beneficial effect on the growth and flowering of the plant.
Also, adherents advise giving Zamioculcas for holidays associated with something new - birthday, housewarming or new year. Then the positive energy of the plant will increase a hundred times.
Is it possible to keep a flower at home?
Despite the signs associated with the negative impact of the flower, Zamioculcas is positively characterized by biologists and flower growers.
This flower is recommended to keep at home, because it perfectly purifies the air, has a positive effect on a person's sleep, gives him energy and vigor. In addition, zamiokulkas is a wonderful decorative option in your home.
But often people plant this plant at home because they believe in its magical properties. That is why they believe in numerous signs. For example, if the plant wilts, then financial failures are coming.
If Zamiokulkas has blossomed, which happens very rarely, then a favorable event awaits the owners of the house: pregnancy, marriage, good luck in work, in a career.
Important! If your zamiokulkas has bloomed, it means that your flower is no longer young. If there are young representatives of this tropical handsome man in the house, then during the flowering period you need to put them side by side. Blooming zamiokulkas will share positive energy with the young.
Zamioculkas is crying, what does this mean?
It happens that the plant "weeps".