Dollar General Bucks Its Confining Format With New Initiatives

Dollar General Bucks Its Confining Format With New Initiatives

The dollar channel has never been considered the most enlightened sector of the retail world. Infamous for budget products at budget prices, down-and-dirty stores and the only thing cutting edge about them being the disposable razors they sold, dollar chains have been at the bottom of the retail food chain for decades.

Dollar General
, the single largest brand in the channel with more than 17,000 locations (Walmart
has less than 5,000 and Macy’s
around 600), seems to be trying to break out of that restrictive mold recently with a number of initiatives that are decidedly not part of the dollar dogma. And while salty snacks, questionable fashion choices and household consumables still remain its core business the retail chain is moving into some areas that its more high-priced competitors should perhaps start paying attention to.

• Fresh Food: Still in a test mode in about 1,300 stores, DG says it will eventually expand its fresh produce offerings to up to 10,000 of its locations. It says the stores sell the top 20 produce items sold in grocery stores, representing about 80% of all the products a supermarket stocks. Operated in partnership with Feeding America, the program is both an answer to criticism of the retailer’s decidedly unhealthy food offerings but also represents an opportunity for new revenue as localized retailers like drug chains and deep discount grocers such as Aldi chip away at big supermarkets. It’s good press but it also could be good business.

• Beauty: Earlier this summer Dollar General introduced a new private label skincare line that expands its existing Believe Beauty brand with 11 new items, all at $5 or less. Believe Beauty debuted in 2019 and is now available at all the company’s stores and has all the prerequisite natural buzzwords a more upscale customer responds to: vegan, cruelty-free and no nasty parabens, petroleum products or phthalates (whatever they are). The line clearly targets a customer that wasn’t shopping beauty or skincare at dollar stores previously.

• Health: Last month the retailer announced it had hired its first chief medical officer in an effort to both build out its health and wellness offerings and get some medical street cred. “Our goal is to build and enhance affordable healthcare offerings for our customers,” CEO Todd Vasos said in making the announcement. It also began offering free Covid testing at some of its locations earlier this year and there has been talk of setting up vaccination stations within its stores, a particularly critical move since so many of its locations are in rural areas where vaccination rates are substantially lower than in bigger cities and affluent suburbs.

• Popshelf: Finally, there is the rollout of the Popshelf retail format concept which moves the company into a somewhat more upscale — again, relatively — sector. Prices are a little higher and the merchandise a little more stylish say those who have visited a Popshelf. The stores seem to be performing well, the company says, with average sales per store in the $1.7 million to $2 million range, verses $1.4 million for a new Dollar General location.  There are less than a dozen stores open so far, but it appears the company is stepping up the roll-out this year although it has not announced any specific target. The company calls Popshelf “a unique store concept and new brand,” even if it overlaps elements of some competitors like Five Below
and HomeGoods.  

Dollar General’s focus on in-store initiatives of course is driven by its weak e-commerce operation so it makes sense for the retailer to continue to build on its physical footprint. Its main competitor Family Dollar — owned by Dollar Tree, another player in the space — has seemed to have more struggles recently with older stores and poorer locations. So with 900 new stores Dollar General locations expected for this year, one thing is very clear: The buck doesn’t stop anywhere near Dollar General.

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