Dollar General Steps Up Self-Distribution Rollout

The discount chain’s DG Fresh will distribute frozen and refrigerated products to all stores by the end of June.

June 04, 2021

DGX Produce Section

GOODLETTSVILLE, Tenn.—Dollar General’s DG Fresh program will distribute frozen and refrigerated products to all stores by the end of the second quarter, Grocery Dive reports. The discount retailer exceeded its goal of expanding the initiative by the end of the fiscal year, COO Jeff Owen said recently.

In reporting earnings May 27, Dollar General said same-store sales fell 4.6% during the fiscal first quarter ended April 30, 2021, compared with the year-ago quarter. Compared with the 2019 fiscal first quarter, however, Dollar General said sales were 17.1% higher. The chain anticipates sales will continue to improve during the second part of 2021 as new stores open. Overall, Dollar General forecasted sales would rise 11% to 13% in 2021 compared with 2019, according to CFO John Garratt.

Owen pointed out that the company has seen store visits rise, which he predicted would lower the average basket size. Dollar General has been on a rapid pace of expansion, opening 260 new locations and revamping 543 more during the first quarter of 2021. This year, the chain is on track to open 1,050 stores and remodel 1,750 locations.

Currently, the discounter sells produce in more than 1,300 locations, with plans to add produce to 1,000 more stores this year. Dollar General’s rollout of more groceries and self-distribution comes as Dollar Tree also ups its fresh and frozen product lines in stores.

Dollar General also wants to scale up its pOpshelf format, which highlights non-consumable goods usually priced at $5 and under. The company opened three pOpshelf stores in the first quarter and hopes to open 50 pOpshelf stores by the close of 2021. A smaller pOpshelf version will come to as many as 25 larger-format Dollar General Market stores this year, as well.

Looking to the future, Owen indicated the company thinks as many as 3,000 pOpshelf stores might eventually open in the United States. Dollar General believes an additional 13,000 stores with traditional formats and 1,000 more DGX urban convenience store locations could be supported in the U.S. market. The chain is also enlarging the number of stores with self-checkout, with 3,400 locations boosting the service at the end of the first quarter, more than double the number of stores with the automated checkouts in 2020.

Dollar stores target the same consumers as convenience stores. To read about the ongoing battle to win over customers, read “The Buck Stops Where?” in NACS Magazine.