- Dollar General is opening 900 stores this year, remodeling 1,000 locations, and relocating 100 stores.
- In the most recent quarter, the retailer’s same-store sales sales grew 4.3%.
Retailers are closing thousands of stores in one of the biggest waves of closures in years.
But there’s at least one company bucking that trend:Dollar General. Instead of shutting down stores, Dollar General is opening hundreds of more locations.
The discount chain says it plans to open 900 stores this year, remodel 1,000 locations, and relocate 100 stores.
In the most recent quarter, the retailer’s same-store sales sales grew 4.3%, and total sales rose 11% to $US5.9 billion. We went to a Dollar General store in Richmond, Virginia, to find out what makes it so successful.
At the entrance of the store, shoppers are greeted with a “last chance” table of discounted goods.
The store feels tiny. Most Dollar General Stores range between 7,000 and 10,000 feet, which is about half the size of a CVS store. It’s lit with bright, fluorescent lights and features narrow aisles with basic metal shelving.
To the left of the entrance, there’s a large selection of snacks, drinks, and candy similar to what you might find at a gas station or convenience store.
Wine and beer are easily accessible.
This is the only refrigerated section in the store.
It features dairy products like cheese, milk, and eggs, as well as frozen meals and pizzas. This section of the store also features dry packaged foods like cereal and soup.
One aisle features items that all cost $US1. These products aren’t necessarily discounted — they just come in smaller package sizes than what shoppers would find at Walmart or Kroger.
For example, this box contains just five trash bags, compared to the boxes of 24 or more bags that Walmart carries. I compared Dollar General’s prices on these trash bags and six other items to Walmart’s prices for the same products, and I found minimal differences. Dollar General was nearly 3% more expensive overall on a basket that cost $US35.75.
I was surprised to find clothing, lingerie, and shoes in the store.
There are also toys, gardening equipment, kitchen tools and small appliances, home decorations, and craft supplies.
No shelf space goes unused. It seems that Dollar General has managed to squeeze everything you would find at a Walmart store into one-tenth of the space.
This helps keeps costs low by ensuring that the stores are cheap to build and require very little labour. Dollar General typically staffs only two to four employees at a time to work the registers and keep the shelves stocked.
But the close quarters mean the aisles are a mess when employees are restocking shelves.
Some of the merchandise is also in disarray.
One aisle devoted to vitamins and over-the-counter medications was completely blocked by an empty box.
Some boxes are deliberately placed in the aisles to bring attention to special deals.
There are also branded displays around the store, like this station of Starbucks drinks.
Shoppers don’t seem to mind the cramped space. The smaller store size means they can get in and out of the store quickly with whatever they need.
The register was empty when I tried to check out. I waited five minutes and eventually left to find an employee who could help me.
Dollar General’s strategy to keep prices low by driving down labour and infrastructure costs is readily apparent in the stores. But the breadth of products in such a conveniently sized store is unparalleled, making it clear why Dollar General is growing when most other retailers are shrinking.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.