March 11, 2019

Bottom dollar battles

Grocery, discount, drug, club, and convenience stores each have plenty of rivals. But among their most formidable foes in recent years has been the dollar store, which has made inroads into tobacco, immediate consumption, foodservice and lottery—sacrosanct categories for many of the aforementioned retailers.

Leading this charge is Dollar General (DG), which has the most locations, the strongest sales in the most recent quarter, and the most ambitious plans among major dollar chains. That should be a cause for pause among retailers, who need to take the DG threat seriously and consider effective strategies to nullify its infiltration into convenience turf, say the experts. Consider these facts:
  • DG plans to open 975 new stores, remodel 1,000 mature locations, and relocate 100 other stores in 2019.
  • It opened 750 stores, remodeled 925, and relocated 92 in the 39 weeks ending its Q3 2018.
  • Among the 925 remodeled sites, 359 were converted to Dollar General “traditional-plus” (DGTP) stores that each provide extra cooler doors to hold an expanded set of perishables. The chain now has 750 DGTP locations, including 450 stores that stock fresh produce. Each DGTP remodel delivers up to a 15 percent comp lift, versus a 4 to 5 percent comp lift for a conventional store remodel, on average.
  • DG has installed more than 20,000 cooler doors across its mature store base through Q3 2018.
  • The chain plans to open 10 more DGX convenience-focused stores in 2019, bringing the total nationwide to 13. DGX locations are roughly half the size of a typical DG store and feature a product selection geared toward “vertical living customers,” according to company CEO Todd Vasos in his Q3 earnings conference call in December.
  • The company launched a “Better-For-You” initiative in 2018, which calls for participating stores (2,700 to date) to carry healthier food options, including several products under the chain’s Good & Smart private label brand.
  • DG has enhanced its queue line, offering more impulse purchase products, in approximately 7,500 stores across the chain.
  • It recently broadened its nonconsumable offerings by dabbling in different new classes for the chain, including home, domestics, housewares, party, and occasions products, most priced at $5 or less.
  • DG also continues to operate approximately 100 Dollar General Market stores, roughly twice the size of a typical 7,300-square foot store to include extra offerings like meat and produce.

To learn more about why Dollar General dominates, read my latest article for CSP News, found here.