Dive Brief:

• Dollar General plans to add produce to about 700 stores during 2021, bringing the total number of stores carrying those items to more than 1,800, Chief Operating Officer Jeff Owen said Thursday during the company’s fourth-quarter earnings call.
• The retailer also plans to introduce two larger store formats, which it started testing in 2020, CEO Todd Vasos said. The first design has 8,500 square feet of selling space, while the second features 9,500 square feet. The larger of the two can accommodate an expanded variety of produce, fresh meat, additional checkout lanes and an area with multiple self-checkout stations, Owen said. 
• Dollar General, which is in the midst of an expansion effort that calls for the addition of 1,050 stores in 2021, sees room to double the size of its existing fleet of about 17,000 stores in the future, Owen said.

Dive Insight:

Beyond opening new locations at a rapid pace, Dollar General is also expanding the availability of frozen and refrigerated items in its stores faster than it had expected.

Dollar General is ramping up its DG Fresh initiative, through which the retailer is striving to reduce costs on frozen and refrigerated items by distributing them itself. Dollar General was self-distributing these goods to more than 16,000 stores — above the 14,000 it had originally planned — from 10 facilities as of the end of 2020, Owen said. The company expects to expand DG Fresh chainwide in 2021 and also plans to add two distribution facilities during the year, he added.

Owen said Dollar General hopes to eventually expand the availability of produce to more than 10,000 stores through DG Fresh.

Dollar General saw same-store sales in Q4 rise by 12.7% on a year-over-year basis and recorded an operating profit for the period, which ended Jan. 29, that was up 21%, to $872 million. For all of 2020, Dollar General’s same-store sales were up 16.3% and its operating profit grew 54%, to $3.6 billion.

However, Dollar General expects same-store sales in 2021 to decline between 4% to 6% year-over-year as the boost it saw from the pandemic fades, Chief Financial Officer John Garratt said during the call. The company projects that it will see identical sales increase between about 10% and 12% when compared to the company’s performance in 2019, he said.

In 2020, Dollar General made headway in its digital operations, Owen said. The company now offers its in-store pickup service in more than 17,000 stores and ended 2020 with almost 4 million monthly active users of its mobile app. As the company looks to make shopping faster and more convenient, it also plans to expand self-checkout from about 1,600 locations to the “vast majority” of its fleet by the end of 2022, Owen said.

Dollar General brought its assortment of non-consumable items to more than 5,800 of the company’s 17,000 stores — at 200 more stores than originally planned — by the end of 2020, Owen said. The retailer wants to bring the non-consumable offerings to approximately 5,700 additional locations in 2021.

Dollar General also plans to open stores based on its new Popshelf format, which debuted in October and features non-consumable items mostly priced at $5 or less, at a quicker place than it had planned because the stores it already operates have performed better than anticipated.

The retailer expects to open as many as 50 Popshelf stores by the end of 2021 and to build the concept in up to 25 of its larger stores, Owen said. Dollar General could ultimately open as many as 3,000 additional Popshelf locations in the United States, Owen said.