CNBC reports that Dollar General, which already is pursuing an aggressive growth strategy for its eponymous chain, also is planning to ramp up expansion plans for its Popshelf format, which “caters to suburban shoppers with higher incomes, but sells most items for $5 or less” and is “designed to be a treasure hunt that keeps shoppers coming back.”
According to the story, “It aims to double the banner’s locations to approximately 300 stores next year. Over the next three years, it plans to grow to about 1,000 locations across the country. Eventually, it sees an opportunity to reach about 3,000 total locations. It is also testing mini Popshelf shops inside of some of its Dollar General stores. So far, it has about 40 of those shops.”
The challenge, CNBC suggests, is “to prove it can hold up in a tougher economy. Walmart, Best Buy, Costco and others have warned of weaker sales of discretionary items as consumers spend more on necessities. Target recently cut its holiday quarter forecast, and Kohl’s pulled its outlook, citing middle-income consumers who feel stretched.”
KC’s View:
It certainly is impressive to see such a growth-oriented company such as Dollar General find the resources to put behind a new concept that focuses on a customer outside its core demographic. I suspect it helps that there are going to be some Popshelf sections inside Dollar General’s more traditional format; it probably allows for at least some of the assets being created to have a more immediate ROI.
Is going after a more affluent customer, in the middle of an inflationary period during which many people already have adopted a recessionary mindset, a good idea? I certainly don’t think it is a bad idea – after all, this isn’t a format created for this year and next. I’m sure Dollar General believes the concept will have staying power, and that there is no better cauldron in which to test it than it harder-than-usual times.
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