Discount Variety Retail Chain Dollar General’s (listed DG at NYSE) test of stores without staffed checkout counters comes as the retailer deals with rising costs and strives to remain attractive to its core customer base.
Associates in stores participating in the pilot will still be able to assist shoppers during checkout, but the company believes they will better serve customers by handling other tasks, Owen said.
The discount chain saw its comparable-store sales slip 0.1% year-over-year during Q1 and its operating profit sag almost 18% by the same measure, signs the fast-growing company is having trouble generating sales organically and is instead depending on new locations to boost its top line. Underscoring that, Dollar General’s net sales rose 4.2% during the quarter, to $8.8 billion, even as same-store sales were essentially flat.
The company added 239 new stores during the quarter and is on track to debut 1,110 locations in 2022, according to Owen. Most of those stores will be based on the retailer’s 8,500-square-foot format, a larger design than its legacy locations that allows more room for items like produce and health-oriented products, Owen said during the call.
“Present economic circumstances are extremely challenging and are delivering Dollar General a larger dose of problems than benefits,” Neil Saunders, managing director of GlobalData Retail, said in emailed comments. “This means the company will need to do more than opening loads of new stores, including looking at how it can attract and retain new shoppers and how it can persuade pressured existing shoppers to spend more.”
Speaking during the earnings call, Dollar General CEO Todd Vasos said the retailer has been able to pass on to consumers some of the higher costs it is seeing by making adjustments to its merchandise selection, including by reducing product sizes. “We make sure that we can layer it in where the consumer still knows and sees the value of what we offer,” Vasos said.
Dollar General carried produce in more than 2,300 of its approximately 18,000 stores as of the end of Q1, Owen said during the call. The retailer plans to boost the number of locations that offer produce to more than 3,000 by the end of 2022, he said.
Owen added that investments in e-commerce are paying off for the company, noting that the retailer’s partnership with DoorDash is yielding strong results. Dollar General offered same-day delivery service from about 11,000 of its locations through DoorDash as of the end of Q1, according to Owen.
Dollar General is also rapidly expanding its in-house trucking fleet and expects this year to double the number of tractors it had last year, Owen said. The company operated more than 950 tractors as of the end of Q1, up from about 700 at the end of 2021, he said.