Kennedy: Dollar General’s appeal not receding as economy grows

'The economy is continuing to create more of our core customer'

Just as it has done for the last few years, Dollar General Corp. plans to open about 1,000 new stores in 2018. Remodels/relocations will be close to that number, too – also similar to past years.

What gives?

The discounter, often compared to Walmart but with much smaller stores, saw its popularity grow during the Great Recession, as a cascade of belt-tightening sent consumers to ever-cheaper alternatives for basic needs.

But these days, the economy is picking back up, so consumers should be returning to their former spending habits, right?

“It is always challenging for our core customer, so regardless of the economic outlook for our consumer, our goal is to do everything we can to provide her with a great shopping experience and to deliver the value and convenience she expects from Dollar General,” CEO Todd Vasos told stock analysts on a mid-March quarterly conference call.

That customer generally lives in small-town America and has an annual household income of $40,000, according to the Wall Street Journal.

As of last month, Dollar General had 14,600 stores in 44 states providing what it calls “life’s simple necessities: laundry detergent, toilet paper, soap, shampoo, socks and underwear – and maybe a gadget or two that you just can’t live without.”

The inventory is a mix of private-label and national brands, but the assortment is limited. Prices don’t exceed $10.

Refrigerated cases added just after the recession expanded dairy, meat and frozen-food offerings. And some newly remodeled stores are getting a selection of produce, too. (Don’t expect to see that in the Capital Region this year, though. A spokeswoman said no remodels in the area would include the addition of produce.) 

Dollar General’s formula has been successful enough that the just-completed fiscal 2017 saw the 28th consecutive year of positive same-store sales growth for the discounter. Sales for the year totaled $23.5 billion.

Asked about the company’s success, the spokeswoman pointed to the ease and convenience of store locations.

New York has more than 400 Dollar General stores, 10 times more than Northeast neighbors Connecticut (47), Massachusetts (46), Maine (41) and New Hampshire (30).

A new 750,000-square-foot distribution center to serve the Northeast, under construction outside Amsterdam in Montgomery County, is slated to open later this year. Sized to serve 800 stores, it’s a sure bet the Northeast store count will grow.

While the spokeswoman didn’t directly answer why Dollar General continues to perform well even as the economy rebounds – “Dollar General is proud to provide value and convenience to our customers in a variety of macroeconomic climates,” she said – CEO Vasos was more blunt.

“The economy is continuing to create more of our core customer,” he told the Wall Street Journal in an extensive interview after fiscal third-quarter results were released in December.

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected].

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