ALEXANDRIA, Va.—Dollar General plans to open approximately 1,000 pOpshelf locations after the discount retailer had a successful test launch of eight pOpshelf outlets opened between October 2020 and May 2021, reports CNBC. The performance of those stores "far exceeded our expectations," said Jeff Owen, COO, Dollar General.
Dollar General plans to open about 1,000 of the stores by the end of the 2025 fiscal year with 100 locations opening in the next fiscal year. It had 30 pOpshelf stores in six states as of Oct. 29 and plans to open its first stores in Texas in the early spring.
pOpshelf is a concept devoted to consumers outside of Dollar General's core market, with one analyst who visited the store in person calling it the best new concept he’s seen in two decades. In many ways, it’s a first for the entire sector, not just Dollar General. pOpshelf locations are 9,000 square feet and focus on seasonal and home decor, health and beauty, cleaning supplies, party goods and other categories. It combines refreshed merchandise with specials and limited-time offers.
The retailer is accelerated its buildout of the concept because of its popularity with customers, said Dollar General Chief Merchandising Officer Emily Taylor in an interview with CNBC. The average basket size and value is higher than at Dollar General stores.
With pOpshelf, Dollar General is looking beyond the general fare offered at its traditional outlets. Its goal is to sell trendy brands and products, creating a treasure hunt experience inside the stores. Mushkin’s firm estimates that at least 50% of a pOpshelf’s store sales are likely to come from higher margin categories. Its target demographic is suburban women with annual household income that ranges from $50,000 to $125,000.
Dollar General has more than 18,000 stores across 46 states, and the company continues to expand its store footprint. The retailer said it expects to open 1,110 new stores in the coming fiscal year, including pOpshelf, Dollar General and international locations. It also is bringing fresh fruits and vegetables to as many as 10,000 stores over the next several years and is expanding into health care. It hired its first chief medical officer in July.
The company is also testing a store-within-a-store format. It has opened 14 smaller versions of pOpshelf inside DG Markets, a format of Dollar General that is larger and has a wider selection of groceries, and it will add more.
Dollar General’s competitor Dollar Tree raised its prices from $1 to $1.25 rather than $1 to cover rising costs. The higher price point will give the company “greater flexibility to manage the overall business, especially in a volatile, inflationary environment,” said Dollar Tree President and Chief Executive Officer Michael Witynski said.
Discount retailers continue to encroach on c-store territory, and the incursion of dollar stores on the c-store space “represents the greatest immediate threat to the convenience industry,” according to a recent NACS State of the Industry report. Dollar Trees feature a Snack Zone concept in an effort to move additional cold beverages, candy and snacks. Family Dollar—owned by the same company—sells alcohol. Fortunately, many convenience retailers are moving beyond “gas, Cokes and smokes” and embracing a differentiated offer anchored in foodservice.
Dollar stores are struggling to maintain their business model in the later stages of the pandemic. Overworked employees, wage increase pressures, supply chain disruptions and communities against dollar stores are among reasons why sales are lagging at these types of retailers.