A poster inside a Dollar General store in Chicago.
Jim Young | Reuters
Dollar General is doubling the construction of larger stores and expanding Popshelf, a new chain aimed at higher-income suburban customers.
On Thursday, the discount set out aggressive plans for the fiscal year that called on the company to open 1,050 stores, remodel 1,750 stalls and relocate 100 more.
As you build new stores, shoppers will see larger sales flats and more merchandise. They will also notice more branding for Popshelf, which the retailer debuted in the fall. The company is testing new locations and using the brand to create a store within a store.
Sales of grocery commodities and household commodities helped drive General Dollar sales growth throughout the pandemic, as consumers cooked more at home and watched their budget during a period of uncertainty. economic. Its sales in the same store increased by 16.3% in the fiscal year.
In recent months, however, shares of pandemic beneficiaries, including the General Dollar, have fallen as investors bet that Americans will divert their dollars to food and travel once they are vaccinated. In a earnings call Thursday, dollar general Todd Vasos argued that investors should continue to bet on the company. He said the retailer can increase profits by increasing its footprint, selling more non-consumable items that have higher margins than food and appealing to a wider range of customers.
Chief Operating Officer Jeff Owen said the retailer estimates it could add up to 17,000 stores nationwide, a measure that would roughly double its footprint.
“Overall, our real estate pipeline remains robust and we are excited about important new store opportunities,” he said.
As Dollar General adds, remodels and relocates stores, Owen said, it will increase the square footage of its sales floor to give more space to product refrigerators and fresh meat, a larger assortment of health and beauty products and rails additional purchase.
Vasos said Dollar General tested the larger store formats in 2020 and found it outperformed the rest of the chain with higher sales. It already has some larger stores with a wide assortment of food and merchandise in general.
Dollar General also plans to build 50 Popshelfstores by the end of the fiscal year, more than its original target of 30, Owen said.
Shelf store
Source: Popshelf
The retailer opened the first two Popshelf stores in the fall near Nashville, Tennessee. Popshelf sells home decor, beauty items, cleaning items and party items, with almost all items costing $ 5 or less. According to the company, its target customer has an annual family income ranging from $ 50,000 to $ 125,000, more than the annual income of $ 35,000 to $ 40,000 from a typical General Dollar customer.
Owen said Popshelf stores offer “a fun, affordable and differentiated treasure hunting experience that is delivered through continuously updated merchandise.” He said the company wants to expand its current 5 stores faster than expected due to the results it saw.
Dollar General will launch a pilot that combines its namesake brand and Popshelf, he said. At 25 stores, customers will see signs on both labels at the entrance. Inside, Popshelf will appear in the center as an in-store shop, he said.
Tests will focus on areas where customer demographics lie between General Dollar and Popshelf, with a household income range of $ 50,000 to $ 75,000, Vasos said.
“If it works – and we think it will – there could be additional ones we do in 2022 and many more as we continue to move forward,” he said.
Shares of the company have risen about 21% over the past year, at the close on Wednesday. On Thursday afternoon they fell less than 5%. Earlier, the company posted fourth-quarter gains that lost estimates and predicted that in-store sales would decline from 4% to 6% next year, compared to unusually high levels of sales caused by the pandemic. If a two-year period is forecast, the General Dollar forecast implies annual sales gains in the same store between 10% and 12%.