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Dollar General in Command

Ezra Carmel
August 18, 2022
Dollar General in Command

As consumers look to maximize their spending power amidst record inflation, discount stores have become increasingly attractive to bargain shoppers. Dollar General has long been synonymous with dollar stores, and in recent years, the chain has charted a course to expand beyond the dollar store category and into the discount grocery and home goods spaces. We dove into the foot traffic data to explore how Dollar General is cementing itself as a true one-stop shop for the value-oriented consumer. 

Positive Trends Year-over-Year

Overall year-over-year (YoY) visits to Dollar General in January and February of this year were up 10.6% and 9.6%, respectively. These are particularly impressive numbers for the Omicron-plagued start to 2022, especially when comparing with the January 2021 retail boom spurred by stimulus payments. The strong YoY visit numbers for January and February are likely due to the attention the media gave to inflation at the start of 2022 which drove visits to discount stores.

Overall YoY visits dropped to 3.8% in March as a result of the comparison to substantial visit numbers the previous year – a period of confident consumer spending amidst climbing vaccinations and another round of stimulus payments. Additionally, the initial shock of rising gas prices in March of this year caused visits to drop as consumers cut down on car trips. But shoppers quickly returned to previous habits in April 2022 as Dollar General’s YoY total visits increased to 10.0%, highlighting the demand for bargains as budgets tighten. 

And while monthly YoY visits per venue numbers have remained slightly below overall visit numbers – likely due to the chain’s rapid expansion – the consistent growth in monthly visits per venue indicates that the new stores are meeting an eager clientele, and that the pre-existing demand for Dollar General is driving the brand’s recent store openings.

Inflation and gas prices continue to give shoppers all the more reason to visit Dollar General. Even though YoY visit growth is easing slightly into the summer, foot traffic trends remain positive with July posting 2.6% YoY overall visits as Dollar General reports exceeding revenue expectations

Dollar General’s Grocery Success 

Dollar General had begun making inroads into the grocery space prior to the pandemic with its 2019 introduction of DG Fresh. And the timing couldn’t have been better, as COVID ushered in a surge of grocery store foot traffic and increased demand for one-stop-shop retailers that could help consumers minimize virus exposure. 

Designated as an essential business when the pandemic hit, Dollar General remained open while other retailers were forced to shut – which drove significant traffic to the chain. And despite the rise of e-commerce during the pandemic, the brand was – and continues to be – uniquely positioned to draw visitors to its physical stores, thanks to its focus on immediate consumables such as food and daily essentials. As the pandemic continued, Dollar General attracted shoppers from across the socioeconomic spectrum who were looking for essentials while avoiding crowds at the grocery store.

These shoppers have continued to patronize Dollar General in 2022, turning to the chain as a true grocery option and driving increased visits. To keep up with demand, Dollar General is investing in perishable products and plans to offer fresh produce in 3,000 locations by the end of the year. Year-over-three-year (Yo3Y) overall visits have been consistently positive for Dollar General in 2022 so far. January saw 40.5% Yo3Y visit growth which remained relatively stable through July’s 37.4% Yo3Y foot traffic increase. Clearly, the steps put in motion by Dollar General in 2019 are paying off in 2022 as the chain proves it’s a legitimate grocery contender. 

Fierce Competition for Walmart and Aldi 

We compared the visit growth of Dollar General to Walmart, the discount superstore leader, and Aldi, the fastest growing grocery chain in the US in 2021, to a January 2021 baseline to see how visits to the three chains have been impacted since the start of last year.

In the baseline comparison, Dollar General’s visit growth in July 2022 (27.2%) outperforms that of Walmart (19.2%) and Aldi (12.8%). This indicates that Dollar General is cementing itself in the discount grocery space, and in the home goods space where Dollar General now competes alongside Walmart. 

Dollar General continues to invest extensively in merchandise diversity and has recently announced plans to carry fresh produce in 10 Arkansas locations ahead of a nationwide launch that will bring fruits and vegetables to 10,000 Dollar General stores throughout the country.  

And to accommodate the expanded selection, Dollar General is growing its store fleet and increasing its store size, while keeping locations smaller and easier to navigate than typical big-box retailers or large grocery stores. 

Location, Location, Location

Another aspect of the competition between these three chains is the sheer magnitude of Dollar General’s store fleet. While Walmart is stable at approximately 3,800 locations nationwide, Dollar General is opening new stores and is currently the largest U.S. retailer by footprint with approximately 18,000 stores. Statistically speaking, 75% of Americans live within five miles of a Dollar General. This cements Dollar General as a force to be reckoned within the grocery and home goods space that Walmart occupies. However, Dollar General's aggressive expansion has yet to make a significant dent in Walmart's visit share. Walmart is still the national retail sales leader and captured 81.7% of Dollar General’s, Aldi’s, and Walmart’s combined visits in Q2 2022.

As previously mentioned, Dollar General has entered the grocery sector and is now competing with stores like Aldi. However, Aldi is a fast-growing retailer in the U.S. market, well positioned as a value grocer and experiencing increased foot traffic trends in its own right. And, Aldi is quickly expanding its own store fleet, already boasting over 2,000 locations with plans for more store openings this year, which means that Dollar General is going to face increasingly steep competition in the discount grocery space.

The Bottom Line

Dollar General is in an impressive position, experiencing positive foot traffic trends in both YoY and Yo3Y comparisons. The dollar store turned one-stop shop has benefitted from booming demand driven by a combination of inflation, high gas prices, and pandemic shopping behaviors. 

With more stores slated to open in the near future, Dollar General shows no signs of slowing down as it looks to draw foot traffic from leaders in both the grocery and home goods categories. 

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