USA: How Dollar General Is Disrupting Grocery

Discount Variety Retail Chain Dollar General plans to continue expanding its Dollar General Market format, with around 16,000 square feet of selling space and lots of perishables.

In April, a team of Yale University public-health professors published a 34-page study that explained how to end the pandemic in America. The researchers’ conclusion? Dollar General. The Goodlettsville, Tenn.-based retailer is now the closest grocery store for millions of U.S. consumers; 75% of Americans live within 5 miles of a Dollar General. Adding COVID-19 vaccination clinics to Dollar General’s massive store footprint would get vaccines in the arms of the people most in need of them, thus giving America its best shot at ending the COVID-19 crisis, the researchers argued.

The Centers for Disease Control and Prevention (CDC) quickly agreed. “We’re exploring a promising collaboration with Dollar General stores, which have locations within 10 or 15 miles of our rural communities in all but four states,” said Dr. Rochelle Walensky, director of the CDC, in a recent interview with the New Haven Register, in Connecticut.

So far, Dollar General hasn’t revealed that it’s joining the federal Retail Pharmacy Partnership Program, which includes Kroger, Walmart, Costco and a number of other food retailers. For Dollar General, which has more U.S. stores than Kroger, Walmart and Costco combined, retail health would be another new frontier, in addition to fresh grocery and e-commerce.

But the fact that Yale University and the CDC would select Dollar General as the ideal retailer for vaccine distribution, as opposed to Walmart or CVS, speaks to the company’s position of power in the food retail industry, a position that is set only to strengthen as it deploys several new strategic initiatives ideally suited for the post-pandemic economy of 2021 and beyond. Since 2019, Dollar General has been expanding its grocery assortments, including international products, as traditional grocery chains have consolidated and closed locations.

It’s no secret that the pandemic has turbo-charged growth at many food retailers. But perhaps no retailer has benefited more from pandemic-related consumer behavior trends than Dollar General.

Even before COVID, the retailer was already taking advantage of economic recessions, retail consolidation and a new fondness among consumers for frugality (and discounters) to amass impressive revenue and expansion over the past decade. Now, post-COVID, the company is planning to leverage momentum from the pandemic to keep aggressively opening stores, become even more of a grocery store than a dollar store, ramp up digital capabilities and hire tens of thousands of new workers to help drive all of that new growth.

In 2020, Dollar General opened more than 1,000 new stores, and remodeled another 1,670 locations. This year, Dollar General plans to open 1,050 new stores, remodel 1,750 stores and relocate 100 stores, representing 2,900 real estate projects in total. With a current (as of this writing) footprint of 17,266 stores, Dollar General is riding a wave of favorable socioeconomic conditions to a projected 18,316 locations by the end of 2021.

Historically, the more stores the company opens, the more profit and revenue it generates, and the more it can keep opening more stores. And Dollar General isn’t stopping at 18,000 or even 20,000 stores. During the company’s latest earnings report, Dollar General COO Jeff Owen said that the retailer is looking at a possible 34,000-plus store footprint. Much of the store base will remain rural, but the company has a new focus on the suburbs as a result of the pandemic-related exodus from urban areas.

“Through a combination of our growing relevance with customers, format innovation, an evolving retail landscape and leveraging new technologies, we estimate a total of approximately 17,000 new store opportunities available across our format types, which we believe represents a long runway for new unit growth,” Owen said.

Beyond opening new locations at a frenetic pace, Dollar General is also experimenting with more new formats. The company has its traditional store format (around 7,300 square feet), plus newer designs such as the DGX urban format (around 4,000 square feet) and the Dollar General Market format (around 16,000 square feet), all of which the company plans to keep growing. In March, however, the company said that it’s making “key changes to its development strategy,” including plans to build on the success of its Dollar General Plus Store, or DGP, format, and the introduction of two more formats, which the company began testing in 2020.