Dollar General will buck a trend in retail as the discount chain on Thursday announced it is planning to open 900 new stores during 2018, for the second straight year.
The discount store chain did not release any figures on the number of new jobs the new stores should generate. CFO of Dollar General John Garratt said that the company’s first priority is investing in new locations where great returns continue to come in.
Dollar General is now a shopping staple throughout the U.S. It currently has over 14,000 stores across 44 states, an increase of 35% from only five years ago. At the end of 2017, over three out of four people in the U.S. will live within a five-mile drive to a Dollar General location the company said.
Dollar stores have become one of just a few groups in retail that continue to thrive. Many of the traditional retailers that are in brick and mortar locations have been passed by e-commerce growth.
Dollar General shares have increased 25% in 2017, while its top competitor in the retail discount industry Dollar Tree has seen its shares jump 38%.
Dollar General has been successful thanks to a business model that remains lean, said a retail analyst. He added that the smaller stores sell inexpensive essentials needed day to day, especially in the country’s rural areas where it does not always make sense for companies such as Walmart and other larger box chain retailers to open stores.
The company remains the most convenient and closest general merchant for many millions of people, added the analyst.
Sales at Dollar General were up by 4.3% during its most recent quarter at stores opened a minimum of one year, which is a strong metric for retail health.
Revenue during the same quarter reached $5.9 billion, an increase of 11% over the same quarter one year ago, in part due to the spending related to hurricanes in Florida and Texas.
More middle income as well as affluent shoppers have helped to lift overall sales at Dollar General. The growth, especially in the metro areas, will allow Dollar General to continue reaching that kind of shopper.
However, the lower-income people in the U.S. remain the primary customer for the store. The stores enticed customers during the 2008 and 2009 economic downturn, and consumers have not stopped returning since, even though the economy has gained much strength.