Dollar General is anticipated to have another strong fiscal year after posting sales of $6.6 billion for the quarter ended May 3, 2019, an increase of 8.3% over the same period prior year. Comps for the retailer increased 3.8% and are attributed to gains in basket size and store traffic.
In the first quarter of 2019 Dollar General opened 240 new stores with no reported store closings. The retailer completed 330 store remodels, 128 of which in the DGTP format, and relocated 27 stores. Dollar General added produce to 50 stores bringing its total store count offering produce to 480 to end the quarter.
Doubling Down on Two New Initiatives
Looking to build baskets and drive traffic Dollar General is committed to the implementation of its DG Fresh and Fast Track programs to spark incremental growth:
- DG Fresh: As it continues to expand DG Fresh in FY2019, the retailer notably invested in the expansion of cooler doors and renovations to its DGTP format stores. The retailer is also expanding its self-distribution model in fresh. Continuing the growth of its tractor trailer network, Dollar General looks to add an additional 75 trucks dedicated to the DG Fresh initiative with the goal of distributing fresh to 5,000 stores by the close of the fiscal year. Dollar General currently has two DG Fresh distribution centers and will begin shipping from its second in Clayton, NC in the coming weeks. Three additional facilities are in the works and are planned to open by FY2019 end.
- Fast Track: This initiative is a two-tiered approach for Dollar General, looking to increase productivity and improve convenience for shoppers. The first tier is to streamline the re-stocking process. The retailer will curate carts with products for replenishment in adjacent aisles, rather than a total store approach – thus simplifying the replenishment process from truck to shelf. The second tier is the test of self-checkouts in select stores to reduce labor hours and improve speed of transactions. Of course, these two new initiatives will have a significant impact on SG&A, but Dollar General believes these investments will significantly improve the in-store shopping experience.
New Year, New Services
Dollar General has announced a new partnership with Western Union looking to drive traffic and become a valuable service for Dollar General shoppers. The retailer itself will leverage its extensive network of 15,597 stores and collect a commission from each transaction.
Due to high levels of engagement with the retailer’s Digital Coupons and DG Go! applications, Dollar General will look to integrate these cost and time saving tools into a single user interface. Features will include expanded availability of a cart calculator, allowing shoppers to budget and apply relevant coupons in real time by scanning a product that is then cross referenced with relevant offers on a user’s mobile device.
After strong Q1 performance, and continued optimism forecasted throughout the 2019 fiscal year, suppliers should prepare for:
The store to become a centralized service hub with in-store visits fulfilling multiple trip missions: Prepare for store and service expansion to continue as Dollar General builds stores across its robust base that aim create solutions for shoppers working to save them time, money and effort while in-store.
Compliance with Dollar General’s one-touch unloading and Fast Track initiative: Align with cost and time saving measures by offering shelf-ready solutions to become a valued supplier as Dollar General looks to streamline its replenishment processes.
Competition in perishable categories as DG Fresh looks to diversify the edible product mix: Consider retailer exclusives to drive traffic and brand recognition as Dollar General continues to build out its fresh product assortment.
If you are a KRIQ subscriber, keep an eye out for our upcoming analysis of Dollar General’s results, operating principles, and implications for fiscal year 2019.
For more information, please contact:
Catherine Lang, Analyst