GOODLETTSVILLE, Tenn. – Dollar General Corp. is adjusting its mix of national to private brands, an effort to increase its gross margins, Supermarket News reports.

Richard W. Dreiling, chairman and CEO, said the company had increased its selection of national brand products to become more relevant to consumers, a move that resulted in lower sales of private brands. 

"We're going to further expand our private-brand presence again this year and rationalize the SKUs that we've put in," he said. "We're not talking about eliminating the brands, but we want to eliminate sizes that give customers a choice. So we are still going to be relevant and have the national brands, but we just don't want to offer as many alternatives in terms of size."

Dreiling cited one example, saying the company used to stock a private-brand version of Claritin in 12-, 24-, and 36-count sizes, with the branded item available only in a 24-count size. "So if you wanted less than 24, you bought our private brand and if you wanted more than 24, you bought our private brand. Now the customer has the option across all six SKUs, so in our zest to be a little more relevant, we inadvertently allowed the customer to be able to trade down on the margin side," Dreiling said.

The CEO said the higher value SKUs are selling at the expense of private-label brands, while shrink is also up. "So we're going to continue to tweak that, though it may take several quarters to make that rebound."

For the first quarter or 2013, sales increased at the dollar store chain 8.5% to a record $4.2 billion, with same-store sales up 2.6%