From Our CEO
Why Dollar General Is the Master of Its Own Destiny
By ASCM CEO Abe Eshkenazi, CSCP, CPA, CAE
If you are in the United States, chances are excellent that there is a Dollar General within a five-minute drive. In fact, the discount chain’s enormous footprint reaches so many rural areas that 75 percent of its stores are in towns with 20,000 or fewer residents. This is by design. Previous CEO David Perdue once told The Wall Street Journal that the company’s master plan was to set up shop where Walmart wasn’t. Many of these places are food deserts — areas where people have limited access to affordable, nutritious food.
Now, Dollar General wants to expand into fresh and frozen foods.
“Its rural tilt helps explains this push,” writes Anna Hensel in Digiday magazine. “It gives Dollar General a unique opportunity to become the only perishable grocer in parts of the country that don’t have the option to choose between a Walmart, a Target and a Kroger.”
The company’s investments in this initiative should reap rewards in both foot traffic and sales. And that’s on top of the significant savings it already enjoys as a result of operating in inexpensive areas.
Dollar General sells private brands and a limited number of items from manufacturers including Clorox, Coca-Cola, Energizer, Kellogg’s, Kimberly-Clark, PepsiCo, Procter & Gamble and Unilever. With only 10,000-12,000 stock keeping units per 7,000-foot store, its shelves look nothing like the extensive options available at traditional retailers. This strategy involves buying in bulk, which gives Dollar General more purchasing power with suppliers. Plus, a small number of products in small stores means fewer stocking associates.
To support its new perishable food aims, the company is launching two logistics initiatives: DG Fresh and Fast Track. DG Fresh involves building its own distribution centers to ship and store the food; Fast Track speeds up stocking processes.
“In addition to the gross margin and in-stock benefits, DG Fresh will eventually allow us to control our own destiny in [fresh and frozen food],” CEO Todd Vasos explained during a first-quarter earnings call, adding that the ultimate goal is to carry produce.
Dollar General reports 29 consecutive years of growth. In 2019, the business will open 975 new stores and remodel 1,000. Mary Hanbury writes in Business Insider, “While competitors have been squeezed by growing competition online and from Amazon, Dollar General and the dollar-store sector, in general, have flourished, swooping in and offering customers prices that are 20-40% lower than grocery and drug stores.”
The transition to stocking perishable food will require Dollar General to employ exceptional sales and operations planning (S&OP). The company’s S&OP team — and industry professionals around the world — would make meaningful strides toward such goals by attending next week’s Best of the Best S&OP Conference in Chicago. This event will explore forecasting and demand planning; integrated business planning; collaboration with sales, marketing and finance; supply chain risk management; product launches; and much more.
The educational sessions are specifically designed to help attendees implement or improve S&OP at their organizations while they earn continuing education credit and maintenance points toward accounting, analytics, ASCM, IBF and related certifications.
I hope to see you at the Best of the Best S&OP Conference — where, in case you’re wondering, you will find eight Dollar Generals within a 10-mile radius.