Discount giant Dollar General plans to introduce a new store format this year that it described as more welcoming as it looks to drive bigger purchases by shoppers.
Todd Vasos, CEO of the Goodlettsville, Tennessee-based retailer, unveiled plans for the new layout Thursday when the company reported fiscal fourth-quarter earnings. One of Dollar General's growth strategies is to elevate its brand by improving the customer experience, according to Vasos, and that includes the updated look.
"This new format is designed to be more open and inviting, resulting in greater browsing and treasure-hunt shopping as customers are exposed to more categories as they navigate the store," Vasos told Wall Street analysts.
The discounter tested the new format in some of its 2025 store updates and was "pleased with the incremental sales lift and relative sales outperformance compared to traditional remodels," he said.
The chain, with nearly 21,000 stores, also reiterated its prior guidance that it planned to open 450 locations this year, down from 581 last year. A year ago, Dollar General said it was closing about 100 of its namesake stores, mostly in urban areas, as well as several dozen of its PopShelf stores.
There is still ample opportunity for Dollar General to gain additional market share with new and existing customers by expanding its brick-and-mortar footprint as well as with the new format, according to Vasos.
Responding to customers
Dollar General has reimagined its "traditional store format by creating a new layout in response to what customers have told us they want from their shopping trip," according to Vasos.
Ultimately, the chain believes "this format will help drive both increased transactions and ticket as the store provides for an even fuller fill-in trip," he said.
Roughly 80% of Dollar General's stores are in rural communities of 20,000 or fewer people, according to Vasos.
"And we see substantial opportunities to continue growing our store count and serving new customers for many years to come," he said. "Importantly, these projects continue to be one of our best uses of capital and are an important part of our growth strategy."
Neil Saunders, a retail analyst and managing director of analytics firm GlobalData, in a note on Thursday approved of Dollar General's slowdown in store rollouts.
"We are encouraged by the gentle tilt away from a massive opening program to more modest openings and a focus on store remodels and refreshes" Saunders said.
Some store improvements
"While there is still headroom for Dollar General to expand physically, this is now less significant than it was five or so years ago," he said. "So, growth needs to be balanced between opening new outlets and improving productivity at existing ones — some of which have started to look a little shabby and are not showing up well compared to newer Aldi outlets or to refurbished Walmart stores."
Nonetheless, there's been an improvement in Dollar General's stores with many "now looking better and are easier to shop," according to Saunders.
"Admittedly, we still believe that Dollar General has some work to do on this front, but there has been a significant step-up over the last year," he said. "Increased labor hours have helped here, and the investment has paid dividends in terms of better sales numbers."
Dollar General didn't respond to an email from CoStar News seeking comment.
The other dollar-discount behemoth, Dollar Tree, is scheduled to report its fourth-quarter earnings Monday.