This company wants to cut your grocery bill in half
New York (CNN Business)Dollar General has become a retail empire by building small stores in rural towns across America to attract mainly low-income shoppers.
Now, the company will expand its push to win wealthier customers in the suburbs using a new store model and name: Popshelf.
Dollar General (DG) said Thursday it will open 1,000 Popshelf stores over the next four years. The retailer first introduced the concept last year and has 30 Popshelf stores today.
Dollar General hopes the new concept will help it attract different customers than its traditional base of rural shoppers making about $40,000 a year. Popshelf stores are targeted for women in suburban areas with an annual household income between $50,000 and $125,000.
Popshelf stores are more similar to rival Dollar Tree (DLTR) outlets — which are also primarily suburban and geared toward middle-income shoppers — than traditional Dollar General locations. The brand expansion also comes as Dollar Tree ends its 35-year strategy of selling everything for $1, which some analysts said risks alienating customers.
Dollar General executives said during an earnings call Thursday that they were accelerating their Popshelf strategy because the initial stores were exceeding expectations and were not taking away sales from its main banner.
Although Dollar General’s 18,000 stores sell mostly food, snacks, cleaning products and home essentials, Popshelf stores are stocked with home furnishings, party items, toys and beauty products for $5 or less. These products are more profitable than food, and the Popshelf concept was born out of Dollar General’s pre-pandemic strategy to add higher-margin goods to its merchandise mix.
Customers often visit Dollar General for specific needs — a run out for milk or laundry detergent — but the company hopes shoppers who head to Popshelf will check out what’s new and leave with a few gifts and pillows.
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