Dollar General operates in many markets where the residents have limited access to other stores. They may be walking distance to the chain, but need to take a bus or get a ride to visit a grocery store, a Walmart, or a warehouse club.
In many cases, Dollar General (DG) customers buy what they need, and that hurts them when it comes to overall price. It’s generally cheaper to buy toilet paper or paper towels in bulk, but Dollar General sells single rolls.
Related: Costco CFO sounds warning on shift in customer spending
And while Dollar General is not a dollar store, it has focused on low prices. The company also understands that in many cases, its stores are the only option for some customers.
That’s why the chain has added fresh food to thousands of locations. Its limited supply of produce offers options to people who otherwise would have struggled to put fresh food on their plates.
Don’t miss the move: Subscribe to TheStreet’s free daily newsletter
Dollar General has had its fair share of struggle in the past year, despite putting up overall strong numbers. The chain plans to shut about 100 of its namesake locations and 45 PopShelf stores.
Those aren’t large numbers, given the size of the chain, but the moves being made reflect operational challenges and the economic standing of some of its customers.
CEO Todd Vasos has his finger on the pulse of Dollar General customers and recently shared some disturbing news.
Image source: Shutterstock
Dollar General customers are struggling
Vasos shared during his company’s fourth-quarter earnings call that sales have been strong.
“We are here for what matters for the customers every day, and the relevance of our value and convenience offering is clear. During the fourth quarter, we continued to grow market share in both dollars and units in highly consumable product sales and also grew market share in non-consumable product sales. Same-store sales increased 1.2% during the quarter…driven entirely by growth of 2.3% in average transaction amount,” he shared.
Customer traffic did drop by 1.1% in the quarter. Vasos shared what he has learned from Dollar General’s customers.
“Our customers continue to report that their financial situation has worsened over the last year as they have been negatively impacted by ongoing inflation. Many of our customers report that they only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities,” he shared.
More Retail:
- AT&T quietly issues stern warning to customers
- Sam’s Club makes a big change to a beloved membership perk
- GameStop announces risky move amid store closures
The company has made its plans for the coming year based on the economic state of its customers.
“As we enter 2025, we are not anticipating improvement in the macroenvironment, particularly for our core customer. In turn, we know our customers expect value and convenience more than ever. We are committed to providing the value they need and continue to feel very good about our everyday low-price position relative to competitors and other classes of trade,” he added.
Dollar General confident about political headwinds
Many retail chains have expressed concerns about the tariffs being put in place on some countries’ imports by the President Donald Trump administration. Vasos does not seem that concerned.
“With regards to current tariffs that have been announced on products that we sell, we believe we are well positioned to mitigate the impact in 2025. We were able to successfully mitigate the tariff impact in 2018 and 2019, though we did take retail price increases in some instances along with others across the industry,” he added.
Related: Massive big-box retail chain closing locations (here’s the list)
The CEO is concerned about his customers’ ability to handle a price increase.
“Given the already stressed financial condition of our core customer, we are closely monitoring these and any other potential economic headwinds, including any changes to government entitlement programs. Importantly, we remain focused on doing everything we can to deliver the value our customers want and need,” he said.