Dollar Stores See Pandemic Sales Bump

Dollar General stocks more fresh produce, while Dollar Tree expands its Snack Zones. 

June 03, 2020

ALEXANDRIA, Va.—Dollar stores have been muscling their way into c-store territory for the past several years, and the two biggest players indicate that their expansion plans will continue with an emphasis on produce and better-for-you offerings, plus $1 snacks for immediate consumption.

Goodlettsville, Tenn.-based Dollar General last week reported strong first-quarter earnings, including a 22% increase in same-store sales compared with the year-earlier quarter, driven by increases in both average transaction amount and customer traffic, the retailer said. Sales growth occurred across the consumables, seasonal, home products and apparel categories, with the largest percentage increase in the home products category, the retailer said.

Dollar General reported net income of $650 million, or $2.56 a share, compared with $385 million, or $1.48 a share, in the year-ago first quarter. During the first quarter of 2020, the company opened 250 new stores, remodeled 481 stores and relocated 17 stores. As of May 1, Dollar General operated 16,500 stores in 46 states. For fiscal 2020, Dollar General still plans to open about 1,000 new stores, remodel 1,500 existing stores and relocate 80 stores.

The discount chain last week announced it has finished remodeling two stores in Baton Rouge, Louisiana, that feature the addition of fresh fruits and vegetables. The company plans to add produce to about 400 stores across the country. The category includes the top 20 items typically sold in supermarkets and covers roughly 80% of the overall categories grocers carry, Dollar General said. Stores also stock dairy products, bread, eggs, proteins, grains and frozen fruits and vegetables. 

Meanwhile, rival Dollar Tree, which owns Family Dollar, last week reported strong earnings as well for the first quarter ended May 2. Chesapeake, Virginia-based Dollar Tree said its revenue rose 8% to $6.29 billion, and same-store sales increased 7% overall, compared with the year-ago quarter. Net income was $247.6 million, or $1.04 per share, compared with $1.12 per share in the prior year’s quarter. The company’s bottom line was impacted by an increase in operating costs, including COVID-19-related expenses, and lower sales of party, candy and Easter holiday merchandise.

The company has resumed its Dollar Tree Snack Zone installation initiatives and renovations to Family Dollar stores after idling these projects in March in the face of COVID-19. Snack Zones feature aisles of grab-and-go packaged sweet snacks, salty snacks, jerkies, candy and cold drinks.

Dollar Tree said it aims to open 500 stores (325 Dollar Tree and 175 Family Dollar formats) and renovate about 750 Family Dollar H2 in fiscal 2020. The company had previously anticipated opening 550 new stores and renovating 1,250 Family Dollar stores this fiscal year.

During the first quarter ended May 2, the company opened 99 new stores, expanded or relocated 21 stores and closed 14 stores. What’s more, the company finished 220 renovations to the Family Dollar H2 format. Dollar Tree operates more than 15,000 stores across the 48 contiguous U.S. states and five Canadian provinces.

Read more about the competition convenience stores face from dollar stores in “The Buck Stops Where?” in the October 2019 issue of NACS Magazine.