US-based discounter Dollar General announced the opening of its 9,000th store at the end of July, pushing it further ahead of rivals as the owner of the largest number of stores in North America. Dollar General overtook 7-Eleven’s store tally in 2003 and has not looked back since.
It is all the more impressive an achievement, given that Dollar General operates in just 35 US states, with more than 1,000 in Texas alone and is notably absent from the huge Californian market.
Also worthy of note is that the retailer has attained its position largely through organic growth, rather than by acquisition.
Having raised around $750m (£481m) in a public offering last August, the retailer decided to accelerate growth. After adding 168 stores in 2008 and 466 last year, there are 600 new stores scheduled for this year.
The discounter has benefited during the protracted downturn in the US, with strong like-for-like sales growth. Nevertheless, its sales record in recent quarters even compares favourably to that of Walmart, one of the recession’s big winners. Like-for-like sales rose 6.7% during the first quarter of 2010, compared to a -1.4% decline at Walmart’s US segment.
As a result of the strong network and like-for-likes, Dollar General made its debut in Planet Retail’s Top 20 North American Grocery Ranking this year, knocking Canada’s Metro from the number 20 slot. The top performers in this year’s ranking were either retailers with a strong value message (Kroger, Dollar General, Aldi) or those in recovery mode (Sobeys, Ahold).
Clearly a strong value perception has helped Dollar General to retain customers, but its investment in more convenient locations, store remodels and the addition of groceries has also helped it to attract new shoppers.
The retailer also aims to move away from the untidy and sometimes chaotic appearance of its stores in an attempt to retain its new breed of higher-income shopper. Private label lines have been expanded and relaunched, and an economy DG Value range has been introduced.
The retailer increased private brand penetration from 17% in 2007 to about 21% in 2009.
These factors are likely to sustain Dollar General’s rise in North American retailing through an upturn in the economy and Planet Retail forecasts sales to grow by 10.4% on a compound annual basis to reach $20.3bn (£13.8bn) by 2014, from a base of just under 11,000 stores.
Matthew Stych, research development manager, Planet Retail. For information contact:
Tel: +44 (0)20 7728 5600