Dollar General Tests Same-Day Delivery Amid Shifts in Customer Behavior

Amid ongoing economic pressures, Dollar General is refining its approach to better serve its financially constrained customers, CEO Todd Vasos said Thursday (Dec. 5) during the company’s third-quarter earnings call.

“Customers continue to face significant pressure and are less able to stretch their budgets at the end of the month and that’s having an impact on their shopping behavior,” Vasos said to analysts. “We see this pressure in the timing of their shopping during the month and the mix of products they buy.”

For low-income customers, this trend is especially apparent, Vasos said.

“They’re buying very close to need and being very selective at the shelf,” he said. “The consumer is seeking value, trying to make ends meet. The last weeks of the month are some of our weakest.”

Dollar General’s third-quarter net sales increased 5.0%, to $10.2 billion, while same-store sales rose 1.3%. Given its rise in same-store sales, Dollar General is seeing growth in essential categories, like consumables, while discretionary items, like apparel and seasonal goods, face declines. As of Nov. 1, there were 20,523 Dollar General, DG Market, DGX, and pOpshelf stores in the United States and Mi Super Dollar General stores in Mexico.

However, Vasos said during the earnings call that “some glimmers of hope” were related to core customer behavior.

“She is buying discretionary items but being very selective when she does and buying very close to need,” he said. “There is a lot of hope there and, while there’s a lot of selling left and, unfortunately, five less selling days between Thanksgiving and Christmas, we’re optimistic on what that consumer will start to spend as we get a little closer in.”

Despite these pressures, Dollar General officials are confident in its ability to further enhance its market share through initiatives focused on improving customer experience, most notably its “Back to Basics” efforts.

“When I spoke with you one year ago and announced this plan, we noted that our customers rely on Dollar General to provide the products they need at great values, in convenient, friendly and easy-to-shop stores,” Vasos said. “When we stepped back and looked at our business through the eyes of the customer, we weren’t meeting that goal consistently across our chain. We laid out several important goals for the team to address these concerns. And I’m proud to note we have made substantial progress executing on these objectives and improving the overall customer experience.”

Vasos added: “As we view our stores through the eyes of the customer, we have seen this notable improvement continue to develop in our own unannounced store visits. And more importantly, our customers are telling us as they have noted this improvement through our survey results at checkout. Customer satisfaction levels have increased by more than 900 basis points since Q1 when we first had these surveys available in the majority of our stores. This coincides with improving in stock levels which increased approximately 180 basis points from Q3 of 2020 through to the end of Q3 of 2024. As a result, we believe we are well-positioned to continue to elevate the in-store experience.”

Meanwhile, Vasos described the company’s Project Elevate, which introduces an incremental remodel initiative within its mature store base. The initiative is aimed at Dollar General’s mature stores that are not old enough to be part of the full remodel pipeline but are included in a lighter-touch remodel, including customer-facing physical asset updates, planogram optimizations and expansions across the store.

He is also excited about the pilot of a same-day delivery program, which launched at the end of the second quarter.

“We’re now up to 75 stores; we’re testing, learning and refining to make sure the experience is just right and the customer is gravitating toward it,” Vasos said. “As we launched this, the customer is telling us we want convenience and want that personalized experience. The great thing about the delivery piece is it’s a little different from other offerings. We’re using a third party. Eventually, it will be available in thousands of stores. We’re mirroring our DoorDash offering we have today. We’re going to do delivery our way and it comes at a low cost to customers and Dollar General. We feel good about the start of this and are excited about what it will produce for Dollar General.”

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