Popshelf Courts Suburban Shoppers Pinched by Inflation

Dollar General plans to open as many as 3,000 Popshelf locations.

December 15, 2022

ALEXANDRIA, Va.—Dollar General’s Popshelf concept is the company’s attempt to attract wealthier, suburban shoppers impacted by inflation, reports CNBC. The company plans to open 300 new Popshelf locations in 2023, 1,000 in the next three years and potentially 3,000 total locations. Mini Popshelf shops are also being testing in some Dollar General stores.

“The fact that we have such great value across a lot of these categories gives our customers at Popshelf an opportunity to really treat themselves at a time where they may have a difficult time doing that in other locations,” Dollar General Chief Merchandising Officer Emily Taylor told CNBC.

Dollar General is thriving during a time when other retailers are feeling the impacts of a tough economy. Walmart, Best Buy and Costco have warned of weaker sales as consumers spend more on necessities than discretionary items, while Target cut its holiday forecast. However, Dollar General’s gross profit as a percentage of net sales was 30.5% in the third quarter.

The company is benefiting from price-conscious consumers, and CEO Jeff Owens said that even customers who make $100,000 a year have been shopping at its stores. According to Coresight Research, Dollar General is the fastest-growing retailer in the country by store count and plans to open 1,050 new stores in the U.S. in the coming fiscal year, which includes the Popshelf locations.

Popshelf is meant to generate higher sales and profits than Dollar General stores, and each Popshelf location is expected to have between $1.7 million and $2 million in sales annually and gross profits of more than 40%. The stores are meant to insight a treasure-hunt feeling that keeps customers coming back. The stores house products typically found at higher-end grocery stores, such as Mrs. Meyer’s hand soap, Amy’s frozen meals and Tillamook cheese, and there are also global snacks, specialty kitchen and baking items, exclusive brands and rotating seasonal items.

“We believe the product pops off the shelf and really brings itself to life without us really even having to do much with it,” Tracey Herrmann, senior vice president of channel innovation, told CNBC.

However, Popshelf could face pressure soon as more consumers rethink purchases, according to Corey Tarlowe, a retail analyst for Jefferies, but the tight labor market means most shoppers are still employed, he told CNBC.

“At the end of the day, it’s all about the value messaging,” he said. “That’s the core of it. It’s Dollar General pricing wrapped in a pretty bow.”

NACS Magazine offers tips for retailers battling with dollar stores for market share in “The Buck Stops Where?”