dollar general produce expansion

Dollar General has some pretty big numbers: 14,000 stores, with another 900 in the pipeline in the next year, a store within 5 miles of 75% of the U.S. population, 130,000 employees and 2 billion customer transactions annually.

The small numbers are just as relevant. CEO Todd Vasos said during a third quarter earnings report the company’s average basket size is just five items, for a total of $12. Their stores are 3,500 to around 16,000 square feet.

But the biggest number I see coming out of Dollar General is what’s coming from their “traditional plus” remodels that include more space for perishables and fresh produce: 3.

Vasos said that’s the factor of sales improvements they see in remodeled stores that get fresh produce added to the lineup – those stores perform 3x better than stores without fresh produce additions. He said another 100 stores will get this treatment in the next year, and another 2,000 to 3,000 stores have the potential for fresh produce. The number could go up to 5,000 depending on how well fresh produce performs. 

But can Dollar General handle fresh produce? Their model is very barebones. It’s not hard to see why they can open 900 new stores in a year when their stores often are not much more than sheet metal building.

They also operate with a razor thin staff. Can they keep up with the rotation, stocking and maintenance required for fresh produce? I’ve visited some of their larger format Dollar General Market stores and have seen relatively well managed produce departments compared to their peers like Save-A-Lot, 99 Cents Only, Grocery Outlet and Aldi.

But the true Dollar General – the sheet metal 3,500-square-foot no-other-store-in-town store is a true test for whether produce can work on this type of scale, and it has some serious potential for accessibility of nutritious foods.

I grew up in a town without a grocery store. We had 81 people and the local gas station/general store/feed store had a few food items, but nothing affordable, and nothing fresh. 

I’d love to know if their model for adding fresh produce is strictly for the larger, more urban locations, or if the company also is considering the more rural sites. 

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