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Dollar General is decades into an ambitious campaign to redefine what a typical dollar store can be, highlighted by aggressive store expansion, an emphasis on grocery, and a new Popshelf concept.
Founded in 1939 in Goodlettesville, Tennessee, the value-focused company has long been a powerhouse in its sector. And Dollar General still adheres to its roots, offering most of its merchandise for less than $10, attracting a consumer base of low-to-middle income shoppers focused on savings.
Like many retailers, the company has seen major sales success during the coronavirus pandemic. In an April 7 analyst note sent to Insider, Zacks Equity Research extolled Dollar General’s “impressive” same-store sales growth, a trend the retailer has enjoyed for 31 straight years.
Dollar General last reported a 12.7% boost to same-store sales in the fourth quarter of 2020. Overall, the year saw same-store sales spike by 16.3%.
But the smaller size of its stores and the relentless pace of its expansion is a key difference between Dollar General and its big-box competitors. And the introduction of several other key initiatives sets the Tennessee-based retailer apart from dollar-store rivals like Dollar Tree.
“Dollar General really perfected the model of the highly-efficient, small format general store,” Carol Spieckerman, president of Spieckerman Retail, told Insider.
Spieckerman said that the company “flew under the radar” for years as it opened thousands of stores. In recent years, competitors have been forced to pay attention, because of the company’s success attracting shoppers for quick “fill-in” convenience runs.
This does not tell the whole story, however. Over the last two decades, Dollar General has transformed itself into a unique force in retail, one that experiments with aspirational concepts and grocery, enjoys the flexibility of a smaller store, and has witnessed unprecedented expansion.
A focus on fresh grocery
Within the retail world, grocery is thought of as a category with razor-thin margins. But Dollar General has been able to incorporate perishables into its stores at a rapid pace.
Its DG Fresh initiative, launched in January 2019, aimed to help Dollar General distribute its own refrigerated and frozen consumables in stores. DG Fresh does not yet include fresh produce, but it’s widely seen as a move that could unlock fresh vegetables and fruits in more stores.
Around 1,100 Dollar General locations currently offer up fresh groceries in the form of refrigerated items, as of the end of 2020. The company plans to add 700 stores to that list in 2021. Dollar General also plans to add 65,000 new cooler doors to its stores, as well as two new DG Fresh distribution facilities.
“The whole initiative is about wringing better margins and profitability out of fresh, so that it doesn’t become a complete loss leader,” Spieckerman said.
Meanwhile, on the non-consumable front, Dollar General is also expanding. In addition to its ongoing Non-Consumables Initiative, which seeks to introduce more home decor and party items to stores, the company has also launched a brand: Popshelf. The concept targets a younger, more affluent consumer base than typical Dollar General stores.
Speaking to Insider in October …read more
Source:: Business Insider