Dollar General breaks new ground to attract buyers: pursue those who need to spend more.
The discounter announced on Thursday that it would open the first two stores of its new popshelf chain near Nashville in the coming weeks and that it would open a total of 30 stores in the first fiscal year. The idea behind the chain: Selling non-essential items like home decor and party favors while serving a clientele who may not be able to shop at Dollar General, the fast-growing, deep discount chain that now has 16,300 stores in the United States.
The company said Popshelf would target households with incomes up to $ 125,000, well above the typical $ 50,000 mark for Dollar General customers. That doesn't mean that Dollar General is redesigning itself as a strip mall version of Neiman Marcus: 95% of the items cost no more than $ 5, no different than a Dollar General.
What will be different are the products that are more discretionary, like beauty products, household items, Christmas decorations, craft supplies, and even some food for parties like sausage platters. And Dollar General says "Popshelf" will be offering many limited-time items to promote the "treasure hunt" ethos that chains like T.J. Maxx so good and spurred repeat visits from buyers. At 9,000 square feet, the Popshelf stores will be slightly larger than a typical Dollar General.
Dollar General is launching a new popshelf chain aimed at wealthier customers.
Dollar General, now a bigger retailer than Macy's, was one of the biggest winners during the pandemic. Buyers were attracted by the low prices, basic necessities such as toilet paper and cleaning products and the improved range of groceries compared to a few years ago, and small shops close to home, historically in rural areas, but increasingly close to in recent years Cities. In the most recent quarter, sales rose 24.4% to $ 8.7 billion.
However, one of its major priorities has been to attract more middle-class buyers without losing key lower-income buyers. As Fortune elaborated in a feature last year, this included remodeled stores, more beauty products, a makeover of private labels and items like Starbucks and Lego products, and more fresh food, including fruit and meat, in some stores.
However, reaching these new customers without alienating or confusing the low-income buyer who is the bread and butter of Dollar General is a delicate balance, hence the idea of the "popshelf." Dollar General has determined that it could expand its network by creating a different brand than its eponymous stores, even if items are still cheap.
The moment is all the more favorable given the weakness of rivals like Party City and the big drugstore chains. The move could also help Dollar General compete more directly with Dollar Tree, which sells all items for $ 1 and has a wide variety of party supplies and inexpensive party food. Dollar Tree's growth has slowed in recent years.
"We are excited to introduce Popshelf from a position of strength," said Todd Vasos, CEO of Dollar General, in a press release. He added that "Popshelf"
would "resonate with new customers" – and ideally provide the chain with more customers with more money.
More needs to be read Retail coverage from capital::
- What low-wage workers need from the 2020 elections
- Petco rebrands, bans shock collars in health and wellness push
- Black Friday traffic could drop as much as 25% due to past business, COVID fear
- Whole Foods CEO explains how business can be better than just "a bunch of selfish greedy bastards."
- Why L. L. Bean is finally joining forces with other retailers