Dollar General (NYSE:DG) is among the fastest-growing retailers in the US, and it has been attracting customers because of its low prices on household items and snacks. It seems like the retailer’s strategy is working well, and it is now planning to open 1,000 new outlets next year as it has been doing in the past several years.
Dollar General increased sales by 4.6% in the recent quarter
In the most recent quarter, the company performed well, and it increased YoY sales at outlets open for at least a year by 4.6%. This was the company’s fastest sales growth quarter in the past five years. Equally, the company also grew its profit by 11% in the quarter and now expects exceptional growth to continue.
The opening of 1,000 new outlets in 2020 marks the company’s unrivaled growth in the industry at a time when most retailers are struggling and closing stores. For instance, Walmart (NYSE:WMT), which for decades has been opening new superstores in new towns, has halted the opening of new stores. On the other hand, Dollar General has been expanding to new towns and cities with small outlets as well as opening in areas it already has to hold on.
Dollar General continues to expand as rivals continue to struggle
Currently, Dollar General has over 16,000 stores in the US taking care of low and middle-income Americans in rural and suburban regions. However, its rival Dollar Tree (NASDAQ:DLTR) targets middle-income customers in suburban areas. Dollar Tree acquired Family Dollar in 2015, which focuses on low-income rural and urban shoppers.
In recent years the US economy has strengthened as dollar stores continue to endure. With wages increasing modestly, consumers living in a paycheck to paycheck have been of benefit to Dollar General. On average, Dollar General customers make around $40,000 a year, but the chain is also reaching for high-income customers seeking discounts.
Despite enjoying impressive growth, there is growing backlash for towns and cities on operations fo the retailer. Some cities have enacted laws stopping the expansion of Dollar General, Dollar Tree, and Family Dollar.