Dollar General thrives amid retail apocalypse

No-frills discount chain bucked trends in 2020

National /
Apr.April 09, 2021 11:45 AM
Dollar General CEO Todd Vasos (Retail Industry Leaders Association, iStock)
Dollar General CEO Todd Vasos (Retail Industry Leaders Association, iStock)

Don’t tell Dollar General that brick-and-mortar retail is dead.

The retailer plans to open 1,050 new stores this year, Business Insider reported, part of an aggressive expansion plan that goes against the push many retailers have made to increase their online operations. That follows a similar pace of expansion in 2020, when 1,000 new stores opened and 1,670 were remodeled.

The retailer’s expansion has focused on serving rural customers, while other companies have converged around urban centers, where higher population density makes delivering online orders more efficient. It’s also changed its store offerings in recent years, adding groceries, as well as home decor and housewares (via its Popshelf brand) to many of its locations.

The strategy has paid off: Last year, the chain reported same-store sales growth of 16.3 percent. The chain remained open as an essential retailer during government-mandated coronavirus lockdowns.

But that atypical pattern of growth has left some investors worried about its post-pandemic future. Already, a drawback in demand is expected, with Zacks Equity Research predicting a same-store decline in sales of four to six percent in 2021.

While customers may not associate online delivery with dollar store items, industry analysts said the company could benefit from partnerships with “digitally native brands.”

The chain’s expansion is part of a broader pattern of growth among discount stores, which have been ramping up to open more locations this year. TJX, the parent company of TJ Maxx and Marshalls, will open 81 stores across its brands in 2021. And Dollar Tree created plans to add a whopping 600 stores this year.

[Business Insider] — Orion Jones


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