Discount Retail Chain Dollar General Corp. (listed NYSE: DG) announced the launch of DG Market + pOpshelf, a “store-within-a-store concept” combining DG Market, its larger format store focusing on groceries, and pOpshelf, its new non-consumables concept targeting a more affluent customer.
The combo store promises to be Dollar Store’s largest format by far. Dollar General began opening the DG Market locations, featuring a wider variety of perishables and dry groceries, about a decade ago to address food deserts in both rural and metro areas. At 16,000 square feet, DG Market is about double the size of a typical dollar store, but small compared to the average U.S. grocer (46,000 square feet). Introduced last October, pOpshelf focuses on home decor, seasonal entertaining and health and beauty items priced below US$5. Slightly larger than the traditional Dollar General at 9,000 square feet, pOpshelf’s target demographic is women in households earning between US$50,000 and US$125,000 annually compared to Dollar General’s target of women from homes with annual incomes of US$40,000.
The company has so far opened 16 pOpshelf locations and has plans in the works for an additional 50 by the end of 2021. On its recent first quarter analyst call, Dollar General officials said pOpshelf’s initial stores are showing significantly higher one-year sales volumes and gross margin rates than the traditional Dollar General store, with a net promoter score in the upper 80s to low 90s.
Dollar General has opened its first two The DG Market + pOpshelf combination stores in Tennessee near its Nashville headquarters. Plans call for approximately 25 more by the close of this year.
“Through this combined format, we aim to deliver the value and products customers trust from a DG Market with the continually-refreshed merchandise including beauty and seasonal products, home décor and arts and crafts through pOpshelf,” said Todd Vasos, Dollar General’s CEO, in a statement. “We have been pleased with customers’ positive initial reactions, and we look forward to welcoming additional customers to experience our newest format.”
Another dollar store testing separate in-store shops is Five Below. In March, the chain announced that it would expand Five Beyond, an in-store concept featuring products with higher price tags, to one-third of its stores.