Dive Brief:

• Dollar General CEO Todd Vasos said in a recent earnings call the company is adding fresh produce to around a third of the traditional stores it’s updating, according to Produce Retailer. Remodeled stores with produce are seeing three times the comp store sales lift of other updated stores, he said.
• All of Dollar General’s store remodels include increasing cooler sets by 160% to accommodate more perishable items. “This allows for a greater perishable assortment which helps drive trips and basket size,” said Vasos.
• The company opened 293 new stores in the first quarter and is on track to open 1,290 stores by the end of this year.

Dive Insight:

Dollar stores are traditionally known for general merchandise and consumables, but they’re evolving their assortments to become more relevant to larger swaths of the population. Nowadays, it’s not uncommon to find an assortment of cereal, snacks, frozen meals and even prepared foods at the discount stores.

Food sales have increased traffic to discounters such as Dollar General, and adding produce stands to capture even more shoppers. A limited selection of fruits and vegetables will round out the grocery assortment for many stores, giving consumers more reasons to shop at the retailer rather than using it as a fill-in trip, a role dollar outlets typically have fulfilled in the past.

Dollar stores also don’t have the best reputation for cleanliness and freshness, so produce can go a long way toward boosting this image.

As Dollar General CEO Todd Vasos pointed out during the company’s recent conference call, only a small percentage of the company’s nearly 13,000 stores carry produce. But the promising test results could signal a wider rollout in the years to come. The company has seen strong financial results lately, with same-store sales in the first quarter rising 0.7%, which was higher than anticipated.

But competition is increasing from discounters like Aldi, Walmart, and the forthcoming Lidl. Dollar stores also are sensitive to economic changes: When the economy improves, they typically lose sales as many of their low-income shoppers trade up.

Further diversifying its assortment could help insulate the company. In addition to a broader product range, recent years have seen Dollar General expand its store portfolio. The discounter now runs close to 200 Dollar General Market stores, which are larger than the traditional stores and offer a supermarket’s assortment of grocery and fresh foods. Earlier this year, the company opened DGX, an urban convenience concept