Dollar General Shoppers Will See Big Changes Soon — Here’s What You Need to Know
Dollar General is making some major changes that would put them into direct competition with companies like Target and Walmart. The discount chain has always been synonymous with everyday products available for next-to-nothing prices, but they have yet to fully step into the fresh foods arena. Dollar General has helped many people with very little income get through tough times, allowing them to grocery shop for half the price of the regular grocery stores in their areas. Now, with new plans on the horizon to be considered a contender in the fight against big-box grocery chains, the chain is setting themselves up to carry fresh food, perishable items, and produce — despite what the critics may think.
As part of an effort to transform their supply chain, Dollar General’s DG Fresh was created to help distribute fresh and refrigerated products in-house, instead of using third-party wholesalers like Target Corporation. Additionally, Dollar General recently opened an 85,000-square-foot distribution center in Blair, Nebraska, to aid in the supply process and, ultimately, make it to where they are able to do everything themselves. But that’s not all. The company is planning on building a similar 170,000-square-foot facility in Amsterdam, New York — which would be their biggest one yet.
While on paper the plan seems like a solid idea, there have been some underlying supply chain issues stemming from the COVID-19 pandemic that Dollar General is actively working to rectify. In the retailer’s annual report they admitted that “in the second half of 2022, we experienced a temporary shortage of available warehouse capacity, primarily due to delays in opening temporary warehouse space.” The report went on to detail a major impact to their operating results due to the “increased costs associated with delays in unloading inventory into warehouse space, as well as inefficiencies in moving goods throughout our internal supply chain.”
Despite their supply chain issues, Dollar General has continued to rapidly expand. The company made further plans for 2023 including spending $1.8 to $1.9 billion on real estate projects such as 1,050 new stores, 2,000 remodels, and 120 store relocations. All of that on top of their $1.6 billion in capital investments last year, which also included the aggressive expansion of their merchandise selection to help attract new customers of all income groups. Gone are the days of appealing to only bargain shoppers, as Dollar General is taking advantage of new formats like pOpshelf — which offers a wide range of everyday basics and unexpected finds including home furnishings and crafts — as well as fresh foods.
DG Fresh seems to be a positive addition to Dollar General’s growing business, although some analysts have questioned the company’s fast-paced growth. Simeon Gutman, an analyst with Morgan Stanely, stated in an interview with The Street that the “last couple of quarters (Dollar General) had some missteps that haven’t gone to plan,” and further pointed out that “the open-ended question is have you debated balancing growth against the core business?”
CEO of Dollar General, Jeff Owen, takes confidence in his company’s abilities, stating that “What we do here at Dollar General is we control what we can control, and that has allowed us to emerge even stronger as we move forward.”
Owen goes on to explain that it is important to remember Dollar General’s long track record of execution, and further expresses his confidence in his team and their ability to deliver on that.
Whether you’re a fan of the Dollar General brand or steer clear of the stores, all that’s left now is to watch and see how they perform. But personally, I always love to see the underdog win.