Dive Brief:

• Dollar General announced plans to build three additional facilities to support its expanded rollout of fresh and frozen goods to stores, according to a news release. Each DG Fresh facility will create 65 new jobs and support around 1,500 stores.
• Two 160,000-square-foot DG Fresh facilities, one in Bowling Green, Kentucky and the other in Ardmore, Oklahoma, will begin construction this fall. The Oklahoma location is expected be completed by spring 2021, whereas the facility in Kentucky is estimated to be done by summer of next year. A 200,000-square-foot distribution facility will begin operations this fall. Dollar General also announced it will open a 630,000-square-foot traditional warehouse in Walton, Kentucky in January.
• Dollar General currently operates six DG Fresh facilities distributing fresh and frozen items to more than 9,000 stores.

Dive Insight:

The pandemic isn’t slowing Dollar General’s progress on its DG Fresh initiative, which the company has said will serve 12,000 stores by the end of this year. In addition to the three announced facilities, Dollar General on Wednesday opened a $26 million warehouse in Montgomery, Alabama serving 1,500 stores in the region.

DG Fresh aims to save on distribution costs and boost Dollar General’s assortment of fresh and frozen products at most of its nearly 17,000 stores. To further increase sales volumes, the company is installing additional coolers, including high-capacity coolers that hold 45% more product, in its stores. Last year, it added 40,000 cooler doors across its stores, and this year it will add 50,000. 

Despite a reputation for selling mostly cheap, shelf-stable goods, Dollar General wants to become the go-to grocer in many communities where it operates. Fresh produce, currently available at around 750 stores, will be in around 1,000 locations by the end of this year. The assortment includes roughly 80% of the categories found in grocery produce departments along with the top 20 selling items.

During the company’s May earnings call, CEO Todd Vasos said he expects DG Fresh to begin benefiting operating margins by the end of this year. Self-distribution has also helped boost in-stock levels during the pandemic, he said.

In early March, Dollar General announced it would nearly double its rollout of produce to stores, and in May Vasos said the company could further accelerate that push given how much people are now spending on groceries during the pandemic.

“We continue to evaluate our stores to put produce in and that very well could be an expansion as we move through later this year and into 2021,” he said.