Dollar Store Enthusiasm: The Opportunity for Food and Beverage
Dollar General and Dollar Tree both saw Q1 sales gains in 2019, fueled in part by a strong performance in consumables, a focus in many remodels for stores of both banners, which are centered on expanding or adding freezer and cooler departments. Dollar General is also expanding DG Fresh, an initiative that began self-distribution of fresh and frozen food early this year.
As both companies expand their offerings in both private label and national brands, Dollar General is focusing on better-for-you options, while Dollar Tree is appealing to snacking occasions with “Snack Zones” and adding adult beverages to their Family Dollar banner.
Our Food Shopping in America 2017 report finds that consumers gravitate to the discount/dollar channel for their low prices. And, while shoppers tend to know what they’re getting in terms of both selection and quality, they’re often surprised by the offerings. About one-fourth (26%) of consumers report shopping the dollar store channel more frequently in the past year, and 44% of consumers say they’ve shopped the dollar/discount grocery channel in the past 30 days.
Shoppers like the excitement factor around what they can get for a dollar and like to explore the store for new and interesting deals/items. Some discount stores are expanding their offerings to include natural/organic, specialty and dietary-specific products at lower price points than conventional grocery.
As channels continue to blur and expectations increase, consumers are bringing their needs for both healthy and convenient foods to all channels. Rural banners such as Dollar General may be more resilient to the threat of e-commerce — at least for now. But by gaining inspiration from grocery and convenience store channels, dollar stores are also ensuring their continued relevance in the brick-and-mortar space through products, store design and branding that better reflect current food trends and consumer needs.
Related: Food Shopping in America 2017 report