Goodlettsville, Tenn.-based Dollar General Corp’s announcement earlier this week that it plans to open 40 new Dollar General Markets in 2012 is a smart move, experts agree.
“I think it’s a really smart move”, says Jim Hertel, managing partner at Barrington, Ill.-based consulting firm Willard Bishop. “Food in dollar stores helps those retailers drive trip frequency and basket size, and it turns much faster than general merchandise and HBC which tend to dominate in most dollar store merchandising plans. I think any hesitancy in the dollar channel to be more aggressive with food traces to margins: food margins tend to be lower than their current mix and that doesn’t sit well with analysts even if gross profit dollars go up. PL food in the channel would be on strategy with their extreme value positioning and could help build loyalty too.”
Agrees Paula Rosenblum, managing partner at Miami-based Retail Systems Research (RSR Research), “One thing I’ll say is it’s an interesting blocking move against the Walmart neighborhood market. I actually don’t see them doing a lot of private label because the short-term goal is to catch the customer’s eye. Later, I expect they’ll fold in more private label just like everyone else does.”
The company operates a total of 62 Dollar General Markets.
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