Dollar General Consumers Fresh Food Alternative Advantage over Legacy Grocers

 

In an era where legacy grocery stores struggle to maintain consumer relevance, Dollar General has rapidly emerged as a competitive force in the fresh food market according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®. The discount retailer, known for its convenience and affordability, now operates over 19,000 branded stores across the United States, more than any traditional grocery chain. With its continued expansion and commitment to fresh food accessibility, Dollar General is positioning itself as a formidable alternative to conventional grocers.

The Rise of Dollar General’s Fresh Food Expansion

Dollar General’s investment in fresh food is exemplified by the recent opening of a state-of-the-art distribution center in North Little Rock, Arkansas. The $160 million facility spans approximately 1 million square feet and is designed to support the company’s DG Fresh network, which specializes in distributing perishable products. This strategic move allows Dollar General to streamline its fresh food supply chain, ensuring that consumers in rural and underserved areas have access to affordable, quality groceries.

Beyond supply chain enhancements, Dollar General has also deepened its community engagement. The company’s donation of $20,000 to the Arkansas Food Bank underscores its commitment to addressing food insecurity. Over time, Dollar General’s contributions in the area have equated to over 300,000 meals, reinforcing its mission of "Serving Others."

Five Key Advantages of Dollar General over Legacy Grocers

1.       Unmatched Store Presence – With over 19,000 locations, Dollar General surpasses all grocery chains in terms of physical stores. This expansive footprint allows for greater convenience, particularly in rural and suburban communities where traditional grocery stores are scarce.

2.       Affordability – Dollar General offers budget-conscious consumers an opportunity to purchase essential grocery items at lower prices compared to traditional supermarkets. The company's emphasis on private-label brands also provides cost-effective alternatives.

3.       Convenience and Speed – Shoppers can quickly access essentials without navigating massive supermarket aisles. This streamlined shopping experience is increasingly attractive to consumers seeking efficiency in their grocery trips.

4.       Expansion into Fresh and Perishables – With the implementation of the DG Fresh network, Dollar General is rapidly increasing its offerings of fresh produce, dairy, and meat, making healthy food options more accessible.

5.       Community Investment and Philanthropy – By supporting food banks and creating jobs through new distribution centers, Dollar General strengthens its community ties, enhancing customer loyalty.

Legacy Grocery Stores: Struggling to Keep Up

While Dollar General gains traction, legacy grocery chains face growing challenges that hinder their ability to compete effectively:

1.       Declining Consumer Relevance – Many traditional supermarkets have failed to adapt to changing consumer preferences, leading to reduced foot traffic and declining sales.

2.       Higher Prices – Due to operational costs, supply chain inefficiencies, and reliance on name-brand products, legacy grocers often struggle to match Dollar General’s competitive pricing.

3.       Limited Store Expansion – Unlike Dollar General’s aggressive growth strategy, most legacy grocers focus on urban and suburban areas, leaving rural communities underserved.

4.       Cumbersome Shopping Experiences – Large-format grocery stores require more time for shopping, making them less appealing for quick trips compared to Dollar General’s compact and efficient layout.

5.       Supply Chain Challenges – Traditional grocery chains often rely on third-party distributors, leading to higher costs and logistical inefficiencies. In contrast, Dollar General’s DG Fresh initiative provides greater control over perishable inventory.

Think About This

Dollar General’s aggressive expansion, affordability, and commitment to fresh food accessibility position it as a dominant player in the grocery market. As legacy grocery stores struggle with declining consumer relevance, Dollar General continues to capitalize on its strengths, offering an increasingly viable fresh food alternative. With its expanding footprint and innovative supply chain solutions, Dollar General is not just competing with traditional grocers—it is redefining the grocery shopping experience for millions of Americans.

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Dollar General is Selling a Lot of Food

 

When you open your 20,000^th store you are executing relevant brand messaging and at Dollar General were talking more and more about a lot of food according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Steve Deckard, Dollar General’s executive vice president of store operations and development, stated, “Today marks an incredible milestone in Dollar General’s history,” said. “From our first general store to today’s 20,000th store opening, our mission to serve others and help customers stretch their budget remains strong. We believe each store provides a positive impact in our hometowns through convenient access to affordable essentials, career growth opportunities for employees, and the ability for local nonprofits, schools, and libraries to advance through Dollar General Literacy Foundation grants.

“On behalf of the DG leadership team, I would like to share my gratitude to the entire DG family for its ongoing commitment to our customers and communities in helping us reach this milestone.”

 

The milestone grand opening began at 9 a.m., and after the celebratory ribbon cutting shoppers received a complimentary tote bag filled with product samples from vendors and were served refreshments from Dollar General private brand Clover Valley.

Dollar General also awarded $20,000 to support educational and tutoring programs with a $10,000 donation each to Alicia Salinas Public Library and to the Boys & Girls Club of Alice.

Dollar General, is one of the dominant players in the dollar store market, has experienced significant growth. Let’s delve into the role of food in this expansion:

1.       Sales Composition:

o    In 2018, food, beverages, and other household consumable goods constituted 78% of Dollar General’s sales¹.

o    The retailer’s focus on food items has contributed to its financial success.

2.       Target Communities:

o    Dollar stores, including Dollar General, strategically target communities with limited grocery options. These typically include:

§  Low-income neighborhoods

§  Rural areas

§  Communities of color

o    Dollar General’s approach is to saturate these areas with stores, often placing them within a five-minute drive of residents¹.

3.       SNAP Sales:

o    Since the 2008 recession, Supplemental Nutrition Assistance Program (SNAP) sales have been a core component of dollar stores’ expansion strategy.

o    Dollar General’s customers primarily reside in households earning less than $49,900, with a significant focus on those reliant on government assistance¹.

4.       Fresh and Frozen Food Business:

o    Dollar General’s sales soared to $33.7 billion in 2023, a 16% increase from the previous year.

o    Its net income rose significantly, partially fueled by its fresh and frozen food business²³.

5.       Health Disparities:

o    Dollar stores’ prevalence in low-income neighborhoods and communities of color may exacerbate existing diet-related health disparities.

o    Individuals with better access to supermarkets tend to have healthier diets and lower obesity rates¹.

The fact is, Dollar General’s strategic focus on food, especially in underserved areas, has played a pivotal role in its remarkable growth.

Don’t over reach. Are you ready for some fresh ideations? Do your food marketing ideations look more like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the following links: Facebook,  LinkedIn, or Twitter

Dollar General 'Food First' Strategy Threatens Legacy Food Retailers

 

Inflation, inflation, inflation is top of mind with consumers and Dollar General is targeting all food retailers with legacy stuck in the middle pricing. That’s right according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® legacy grocery stores and C-stores that have not elevated their food retail positioning and are still clinging profits form slotting fees and middle of the road pricing are soon going to be in for a big surprise.

In case you have not heard, Dollar General is putting “Food First” by investing heavily in store brands. The discount retailer has expanded its private label Clover Valley to include national-brand alternatives, debuting more than 100 new items for 2023. This includes a wider selection of sauces, condiments, entrees, sides, snacks and more at what the company described as affordable price points, with many also featuring stylish new packaging designs.

Jackie Li, SVP of private brands and global sourcing for Dollar General, stated, “When Dollar General pioneered the ‘dollar store’ format in 1955, few food products were offered. With continual growth and changes to the company’s business model, our product selection has evolved,” ... “Customers shared that they believe in the quality and equity of Clover Valley and were receptive to more innovative products. We have put ‘Food First’ this year because we see a need and to fulfill the desire for even more options.”

So, Dollar General’s Food First initiative is a broader strategy to provide customers with healthier options, including more food products and fresh food. While the company isn’t a grocer, approximately 80% of Dollar General stores serve communities of 20,000 or fewer people, with many Americans, especially in rural areas, relying on the retailer for their basic, everyday and household essentials.

Did you realize that consumables recently accounted for approximately 80% of total sales at Dollar General and the company’s research indicates that Dollar General offers a price advantage over most food and drug retailers, offering prices that are competitive with even the largest discount retailers. ChaseDesign’s 2023 Dollar Store Channel Survey also found that grocery is now the top category shopped in the overall dollar store sector.

Therefore, it’s no surprise that 80% of new Dollar General stores and nearly all of its store relocations for FY23 will be in one of the retailer’s larger store formats, providing the opportunity for a significant increase in cooler count, as well as the ability to add fresh produce in many stores.

Now according to Dollar General, as of the first quarter of 2023, it offers fruits and vegetables in nearly 3,900 stores, with plans to have produce in 5,000 locations by January 2024, giving the company more individual points of produce distribution than any other U.S. mass retailer or grocer.

Why c-stores and grocery stores should worry, Dollar General’s Clover Valley private brand, which was introduced in 2009, has expanded to include approximately 600 items. Examples of the latest on-trend additions include Lobster Bites; Crab Cakes; Chicken Dipping Sauce; Siracha Chili Sauce; Parmesan Garlic, Mild Buffalo and Medium Wing Sauces; Cookies ‘n Crème and Turtle Sundae Trail Mixes; BBQ, Dill Pickle or Ranch Sunflower Seeds; Spicy Nacho Cheese or Chili & Lime Rolled Corn Tortilla Chips; Mandarin Orange or General Tso’s Chicken Bites with Rice; Black Bean & Corn Salsa; Berry Blast or Tropical Fruit Flavor Snacks; Peanut Butter & Jelly Wafer Sticks & Dip; Peanut Butter Spread with Honey; and 100% Whole Wheat Sandwich Bread. Additionally, all Clover Valley products come with a 100% satisfaction guarantee.

Emily Taylor, EVP and chief merchandising officer at Dollar General, stated, “We have made significant enhancements to our private brands in 2023, and we know how important these value offerings are for our customers,” ... “We believe these products will further differentiate Dollar General in the marketplace as we look to provide our customers with tremendous value on quality products.”

Research confirms the popularity of store brands, with dollar share reaching record levels this year. The Private Label Manufacturers Association (PLMA) shared data from Circana showing that dollar sales of store brands outpaced national brands during the six-month period ending June 18. Moreover, store brands’ dollar sales increased to a record level (18.8%) for the first part of 2023. Private label sales grew 8.2% on a year-over-year (YoY) basis during that time, while national-brand sales rose just 5.1%. Beverages led the charge, climbing 19% on a YoY basis, with notable gains also coming from general food (up 16%) and refrigerated products (up 16%).

As of May 5, Goodlettsville, Tenn.-based Dollar General operated 19,294 Dollar General, DG Market, DGX and pOpshelf stores across the United States, and Mi Súper Dollar General stores in Mexico. The company is No. 16 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America.

Foodservice Solutions® team is here to help you drive top line sales and bottom-line profits. Are you looking a customer ahead? Visit GrocerantGuru.com for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may the clue you need to propel your continued success.

Growing Grocery Dollar General Driving Legacy Grocery Stores Nuts

 

Doller General has been garnering customers from grocery stores for years.  The fast service, lower prices and targeting the 55% of U.S. households comprised of one or two people.  Much to their surprise they have also been garnering a larger and larger selection of U.S. customers in a hurry eve those from large households.

According to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® “legacy grocery stores the ilk of Publix, Albertsons, Kroger will very soon have to evolve or will simply begin to fade away as Doller General siphons off more and more customers.  Why will they? 

Simply consider that Dollar General on Monday announced the opening of a new DG Market in Winchester in southern Illinois. The store is just about a mile from the Dollar General location it replaces, but it features a greatly expanded selection of fresh meat and produce.

This new DG Market sell the top 20 items sold in traditional grocery stores, including lettuce, tomatoes, onions, apples, strawberries, potatoes, sweet potatoes, lemons, limes, salad mixes and more, the company said. The items cover about 80% of the produce carried by most grocery stores.

“It’s like a Walmart for a small town,” Winchester Mayor Rex McIntire told local media, adding that the city sold the land to Dollar General for just $32,500 because it was so interested in securing a grocery store for the site.

Dollar General said last year it wants as many as 10,000 of its stores to eventually carry fresh produce, making it an increasingly popular retailer in rural areas and other food deserts, especially during a time of high inflation. Regular readers of this blog knew that.

Currently, Dollar General sells fresh food in about 2,700 of its more than 18,000 stores. In August, the retailer said that sales of fresh and frozen foods had grown faster than any other Dollar General department during the first half of the year.

Dollar General CEO Todd Vasos, stated, “With our extensive store footprint, often in communities others have chosen not to serve, Dollar General is uniquely positioned to help combat hunger by offering convenient access to a variety of nutritious foods at accordable prices,”.

In case you did not know, about three-quarters of the U.S. population lives within five miles of a Dollar General store.  In addition to meat, fruit and vegetables, the new DG Market also carries the same brands and categories sold at a traditional Dollar General, the company said.

“The new DG Market format aims to provide the Winchester community with an updated design and closer access to fresh foods and a convenient location to purchase the items they want and need at everyday low prices,” Matthew Simonsen, Dollar General’s SVP of real estate and store development, said in a statement.

Success does leave clues and if you are not evolving with the consumer, you are simply fading away.

Invite Foodservice Solutions® to complete a Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869