Dive Brief:

• Dollar General saw comparable sales in its perishables department rise in the "high single digits" during the fourth quarter of 2021 even as the retailer logged an overall decline in same-store sales of 1.4%, Chief Operating Officer Jeff Owen said during an earnings call Thursday.
• Sales penetration across Dollar General's frozen and refrigerated categories has grown to 9%, driven by the expansion last year of the company's DG Fresh self-distribution initiative to all of its more than 18,000 locations.
• Dollar General has been boosting its in-house logistical capabilities as it presses ahead with an ambitious expansion program.

Dive Insight:

Dollar General is looking to the growing role perishable products are playing in its operations to propel it financially amid the tough competition it faces from other retailers.

Sales of perishables were the company's largest source of comp sales revenue during Q4 and for all of 2021, Owen said during the call. DG Fresh, meanwhile, is succeeding in its mission of helping Dollar General save money, and the company expects to realize continued financial benefits from the program as 2022 unfolds.

Dollar General now sells produce in more than 2,100 stores and plans to leverage DG Fresh as it moves toward its goal of eventually bringing fresh fruits and vegetables to more than 10,000 locations, according to Owen. The company plans to expand produce to more than 3,000 stores by the end of the year, he said.

The company's investments in its frozen and refrigerated operations come against a backdrop of tough comparisons with prior quarters, when it rode tailwinds provided by government stimulus checks and pandemic-related spending in general. Dollar General recorded an overall decline in comp stores of 2.8% for fiscal 2021, while net sales for the year were up 1.4%.

Todd Vasos, Dollar General's CEO, said he is optimistic the company's results will improve during the months ahead. "The first quarter is going to be a little challenged," Vasos said during the earnings call. "But as we move through the rest of the year, we feel better and better about where that comp is going to be."

Owen said Dollar General will continue to move forward with its aggressive expansion efforts during 2022. The company plans to open 1,110 new stores this year and renovate 1,750 others. The company debuted 1,050 locations and remodeled 1,752 additional locations in 2021, he said.

Dollar General has been taking steps to meet a greater proportion of its transportation needs using its own equipment and employees as it looks to strengthen its balance sheet. The company's private fleet of about 700 tractor-trailers accounted for about one-fifth of its outbound transportation requirements as of the end of 2021, and Dollar General hopes to increase that figure to 40% in 2022.

To help accomplish that, Dollar General is looking to double the size of its in-house trucking fleet this year. The retailer noted earlier this month that its efforts to expand its transportation capabilities were one reason it expects to add about 10,000 net new positions to its payroll in fiscal 2022.

Dollar General saves about 20% in associated costs whenever it replaces a third-party truck with one from its own fleet, Owen said. "Moving forward, we believe our private fleet will become an increasingly significant competitive advantage as it gives us greater operational control than our supply chain while further optimizing our cost structure," he said.

Dollar General is also expanding its reliance on self-checkout technology to improve efficiency. The company had the equipment in approximately 6,100 stores at the end of last year and could have the units in as many as 11,000 locations by the time 2022 wraps up, Owen said.

Owen added that Dollar General significantly expanded its retail media network in 2021. The network now reaches 90% of the retailer's customer base, he said.