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USA: Dollar General's Classic Strategy Is Working Again

Discount Variety Retail Chain Dollar General is finding success with its original price point as the Goodlettsville, Tenn.-based discount retailer makes serious traction with its $1 items.

Value Valley, which comprises more than 500 rotating items priced at $1, outperformed the chain average in the first quarter with a comparable sales increase of 18.4% year over year. Health and beauty performed particularly well.


Dollar General also introduced several new $1 private label items over the last few months and a new frozen food section that features a full door displaying new frozen items at $1. The discount retailer also offers more than 2,000 items at or below the $1 price point.

“We believe this price point continues to be important to our customers and are excited about the opportunity to continue providing tremendous value through these offerings,” Dollar General CEO Todd Vasos said during the first-quarter earnings call.


Dollar General sees customer penetration growth across low-, middle- and high-income segments, with the largest increase coming from the highest income segment: those making over $100,000 a year.


The ongoing challenging economy is driving this $1 movement, which has only become harder with the rising cost of gasoline. A reduction in Supplemental Nutrition Assistance Program (SNAP) benefits is another issue, but Dollar General grew wallet share with SNAP customers in the first quarter.


“We know that value and convenience are always important to our customers but even more so right now,” Vasos said.


Dollar General Corp. reported stronger first-quarter results last week, driven by higher sales, increased customer traffic and improved operating performance despite weather-related challenges and store closures.


The discount retailer said net sales rose 3.4% to $10.8 billion in the quarter ended May 2, up from $10.4 billion a year earlier. Same-store sales increased 2%, reflecting a 1.4% rise in customer traffic and a 0.5% increase in average transaction size.


New stores and gains across all major merchandise categories, including consumables, seasonal products, apparel and home goods, supported net sales growth, the company said.

The company opened 190 new stores in the U.S. in the first quarter and five new stores in Mexico, remodeled 659 stores through Project Renovate and 711 stores through Project Elevate, and relocated six stores.



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