Dollar General’s string of good results continues, thanks in part to higher-income shoppers.
The retailer delivered strong revenue growth of 5.3% for the first quarter, with comparable sales increasing by 2.4% over the same period last year. Last year’s numbers were strong, too.
CEO Todd Vasos said the growth was propelled by the dollar store’s delivery initiatives, including a partnership with DoorDash, which are attracting a “new and diverse” set of customers.
“The incrementality on DoorDash has always been over the top phenomenal,” he said on an earnings call Tuesday.
Delivery has also helped Walmart expand its e-commerce sales, in part by offering higher-income shoppers an increasingly convenient way to shop from stores they haven’t typically frequented.
In other words, one reason wealthier households are shopping more with Dollar General and Walmart is that they don’t have to actually go inside a Dollar General or Walmart to shop.
Both companies have also invested heavily in store renovations, which have improved the shopping experience and boosted sales.
Data from location analytics company Placer.ai found that first-quarter visits to Dollar General stores were up 1.9% year over year, with April visits up 6.5%.
Vasos said the company saw customers “trade in” at a “pretty good clip” during the first quarter, meaning they opted for Dollar General over pricier stores. He said that trend has continued into the second quarter.
He also said Dollar General is one of the few retailers that still offers a broad assortment of items for $1 or less.
“It’s elusive out there,” he said. “But we have over 2,000 items at or below $1 price inside of our store.”
One way the company has managed to hold that line is by partnering with suppliers to offer smaller package sizes — otherwise known as shrinkflation.
“I would tell you it’s exactly what the customer needs,” Vasos said. “Especially where we are right now in her economic cycle, she definitely wants to be able to afford those luxuries or just name brand products — as is evidenced by what she shops — but she needs it at a price point that she can afford.”
Taken together, the ease of delivery and the dollar price point appear to be helping Dollar General win a new cohort of shoppers at a time when US households are increasingly counting their pennies.
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