Dollar General Corporation is an American retail chain of convenience store, grocery and departmental store under the privately held Wachovia Company. Dollar General Corporation was founded by Frank Vandersloot in 1924. At present, Dollar General is one of the largest retailers in America with outlets in all fifty states and Washington, DC. Dollar General Corporation is a publicly held company headquartered in Goodlettsville, Tennessee, which is known for its discount grocery stores and supercenters.
Since its founding, Dollar General has grown significantly both in terms of locations and sales volume. It currently operates 16,000 stores across the continental United States and has been valued at more than two billion dollars on a per year basis. As of February 2021, the company reported that it had sold its sixty-four franchises to independent retailers and was expecting to raise annual sales for its core market. At this time, the company holds approximately forty-two percent of the North American grocery store market.
- With annual sales of approximately two million dollars per year, it is the fourth largest publicly held company in terms of revenue behind Tesco, Wal-Mart and Costco. The dollar store concept that Dollar General began with has since expanded into over thirteen hundred retail locations across the United States and is expected to have revenues in excess of two million dollars in 2021.
- In addition to its core locations in Kentucky, Oklahoma and Texas, Dollar General also operates a number of franchisees’ locations. It is believed by analysts that the company derives most of its revenue from the more affluent communities where it has multiple outlet locations. It is no surprise then that the average income of a dollar store employee is in the mid-five dollars range.
At its founding, the company was operated as a for-profit business and until it went public in 2021 it was profitable despite accounting irregularities. As its revenues increased, the dollar store concept was able to gain a foothold in the highly competitive grocery industry. As its name implies, the dollar store operates on a cash basis and is not dependent on sales of products as are the case with traditional supermarkets. With a limited amount of inventory and zero or low costs associated with production and delivery, dollar stores generate high gross margins.
Recently, dollar store sales have been slow to recover from the energy drink and bottled water market downturn that began in late 2021. In January, the company disclosed that it would close fifty underperforming grocery stores including its flagship store in Kentucky. Some analysts believe this is the beginning of the end for the once most profitable grocery chain. Analysts also believe that the recent slowdown at the national grocery stores is directly related to the decline at the national level in oil and gasoline prices.
In a conference call with analysts, the new store manager, Scott Collins, was asked if the company’s sales trends were indicative of a slowdown in business. Mr. Collins responded, “We do believe that the [restaurant dollar store] segment continue to exhibit growth in 2021.” Analysts were surprised that the store manager mentioned both gas prices and food prices as being directly correlated with the performance of dollar stores. This indicates that the company believes that food price inflation will continue to outstrip the impact of lower gas prices. Many experts believe that this could negatively impact the health of the dollar.
expansions at Dollar General Distribution Center in Kentucky and Texas
Dollar General is a chain of full-line departmental stores based in suburban Chicago, Illinois. As of July 2021, Dollar General was purchased by The Blackstone Group, which owns and leases retail properties and other forms of property for multi-family retailing. As of July 2021, Dollar General operations had 16,278 locations in the continental United States, including one location each in Texas, Arizona, Georgia, Maryland, and Florida.
In August, the company released details about its upcoming store expansions. First, they have decided to open two new stores at the former Grand Targhee Plaza at Northwood Village Mall in Cresthill, Illinois. This location will consist of two store locations: a single lane deli and a full-service pharmacy. Another new store will be added to the existing distribution center at Crestpoint Shopping Center in Urbana, Illinois. This addition will offer expanded services and will include a full-service salon. Both stores are scheduled to open in early fall.
Also in August, The Blackstone Group decided to expand its presence in the dollar marketplace by acquiring a controlling interest in the Dollar General Distribution Center and two other distribution centers in Michigan and Wisconsin. According to the press release, the acquisition of the Dollar General stores gives the company “unlimited access to its core markets.” Additionally, the acquisition “represents a significant value in terms of long-term stable funding,” according to the release. Both stores will be operated under the name “DP” (Dollar General). These stores will expand their current footprint of eight states, from Arkansas, Georgia, Kansas, Mississippi, Oklahoma, Ohio, and South Carolina to cover all of the states between those two regions.
The acquisition of Dollar General by Blackstone brings the number of locations operated by this nationwide distribution center to 40. According to the news release, the company is “expects the transaction to close in the second half of fiscal year 2021.” It is unknown if there are any additional transactions in the works at this time.
Earlier this summer, Kentucky Attorney General Andy centrally announced that he was reviewing the pending transaction involving the Dollar General outlets in Kentucky and would be announcing more details soon. In late August, Kentucky’s Board of License approved the sale of two distribution centers to the Blackstone Group of Companies. Kentucky is one of several states in which the Blackstone Group has acquired a large number of shopping centers and malls. The mall ownership deals in Kentucky represent approximately 13% of the company’s total equity.
The new additions to the Dollar General Inc. locations in Kentucky and Texas bring the total number of Dollar General stores to forty-seven. The new distribution centers will enable the company to continue expanding into new areas including Illinois, Maryland, and Florida. These new centers will also add to the company’s presence in Florida, which has become one of its key markets. In recent years, Dollar General has focused much of its attention on opening stores in locations in Illinois, Maryland, and Florida. By adding these three new stores, the company will be expanding into new regions, which should help raise its overall profit margin.