Dollar General is preparing to embark on a massive expansion as it comes off a strong Q3 2021. The off-price retailer announced plans for 1,050 new store openings, 1,750 store remodels and 100 store relocations; the launch of 1,000 pOpshelf locations by fiscal 2025; and the company’s entrance into Mexico with 10 stores in fiscal 2022.
The new store openings will help Dollar General maintain its momentum. The retailer posted a 3.9% net sales increase for the quarter, reaching $8.5 billion, but that was mostly attributed to new store openings. Same-store sales decreased 0.6% year-over-year as traffic at existing locations declined slightly, though comparable sales levels were still up 11.6% over 2019.
The pOpshelf plans are particularly notable as they represent Dollar General’s efforts to establish a foothold in a more upscale market. The stores’ performance has been positive since they launched in October 2020, and Dollar General will triple the pace of openings in 2022 and continue accelerating expansion of the concept, which includes both standalone and store-in-store versions, to reach its fiscal 2025 goal.
Dollar General’s Mexican locations will operate on a similar strategy to U.S. locations. Stores will carry a curated selection of products that are used and replenished often, such as food, pet, cleaning and paper products and fresh items, in addition to discretionary non-consumable items.
“We are taking what makes DG great in the U.S. and adapting it to the Mexican retail landscape and feel strongly that our unique proposition will resonate with the Mexican consumer,” said Jeff Owen, COO at Dollar General in a statement. “We look forward to customers’ response to our new stores and laying the foundation for future growth in Mexico.”
Both the opening higher-priced concepts and entering new markets could help Dollar General combat inflation, which is already being felt by its off-price competitors. Dollar Tree, which had been the last retailer to hold to a $1 maximum price point, is now testing higher prices at its flagship stores.
The company also announced major expansions for its higher-end Dollar Tree Plus stores, with at least 5,000 total by the end of fiscal 2023, and its hybrid Combo Store format, which will add 400 combined Dollar Tree/Dollar Tree Plus locations in fiscal 2022, with the potential of up to 3,000 over the next several years.
“Our brand promise is that customers get great value for what they spend at Dollar Tree,” said Michael Witynski, President and CEO of Dollar Tree in a statement. “We will continue to be fiercely protective of that promise, regardless of the price point, whether it is $1.00, $1.25, $1.50.”