- Dollar General's business model.
It's a retailer that can make a lot of money
selling very cheap goods to a relatively
small number of people.
- [Narrator] If you've ever shopped at a Dollar General,
you might've found the store on a remote road like this one.
- [Sharon] It has every appearance
of being in the middle of nowhere,
but this is a meticulously planned,
very well thought through strategy.
- [Narrator] A strategy that's been key
to Dollar General's success in rural America.
The company is bucking current retail trends
by expanding rapidly and opening stores
away from population centers.
- Dollar Generals go where Walmart's aren't.
- [Narrator] But it's not just the strategic locations
far away from big box stores.
Dollar General employs a number of tactics
to keep operating costs down.
Including leasing stores, paying employees low wages,
and selling limited products.
And yes, that includes stuff that isn't really a dollar.
- Dollar General is almost something unto itself.
It kind of takes pieces
from a lot of different retailing models.
- [Narrator] This is the economics of Dollar General.
After more than 30 consecutive years of sales growth,
Dollar General has become one of the most profitable
and fastest growing retailers in the US.
Last year, the company brought in
more than $30 billion in sales.
So how has a store that sells products at rock bottom prices
manage such extreme growth?
- They add about two and a half stores every day
in the United States.
Just for scope, there's more than four times
as many Dollar Generals as there are Walmarts.
There's more Dollar Generals than there are McDonald's
in the United States.
- [Narrator] There are currently
more than $17,000 Dollar Generals in the US.
But if you don't live in rural America,
you might not have ever even stepped foot
inside the store.
- [Sharon] Where would you typically find a Dollar General?
You'd think of a two lane road.
Think of, you know, places where the houses are far apart,
farmlands, kind of lower income communities.
You might find them by a post office, or a church,
or at an important intersection.
- [Narrator] This is often a deliberate decision.
The company has formulas for identifying locations
to open stores.
Often, the Dollar General will be down the road
miles away from the nearest town and Walmart.
Areas with limited shopping options.
Three quarters of Dollar General stores
serve communities of 20,000 people or less
according to the company.
- It looks for need, first and foremost.
So it's gonna look for a place
that we might call a food desert, where there are not,
there's not a grocery store, there's not a big box store.
It's kind of target demographic is households
with people making $40,000 or less.
And it looks for a place
where it can get inexpensive real estate.
- [Narrator] To keep costs down,
Dollar General tends to lease their properties
rather than buy them.
And inside the stores, it has a limited selection
of products that it buys in bulk,
which gives the company more buying power with suppliers.
Most Dollar General stores don't offer fresh produce.
And compared to grocery stores,
have less perishable items.
Which have a shorter shelf life and bring in lower margins.
- [Sharon] You walk into a Dollar General,
you're gonna see metal shelves.
It's gonna be quite bare bones.
Think linoleum, think, you know,
think bright lighting.
You won't see a lot of people working there.
- [Narrator] By paying low wages to a minimal,
often part-time staff, the company keeps labor costs low.
The median annual income for employees
is just over $16,000 according to Dollar General.
Dollar General says they employ
more than 157,000 individuals,
and that they offer employees
competitive wages and benefits.
- These stores are staffed at minimum levels,
so there aren't many employees.
They pay closer to a gas station attendant
than even a Walmart employee.
So it's people that much like their customer base,
people who live in an area where there aren't
a ton of other options.
- [Narrator] Despite the name,
not everything costs a dollar.
But prices are extremely cheap and often significantly lower
than grocery and drug stores.
Critics say Dollar General strategies harm local communities
by not providing healthy food options
and potentially hurting the local small business economy.
Dollar General says that they are not a grocery store
and that they are serving customers
that would otherwise not have access
to an affordable retail option.
Ultimately, the low prices and the convenience
for rural customers is what keeps people coming back.
Some shoppers have even found items for under a dollar.
- [Shopper] Penny shopping at Dollar General.
Let's go.
The first store I found Propel water for 1 cent.
Now let's just use the Dollar General app,
scan and verify it's a penny before heading to the register.
- [Narrator] Dollar General is on pace to continue growing.
The company grew 16% during the pandemic.
A time where other retailers saw growth in e-commerce,
not in-person shopping.
- Dollar General plans to open
about a thousand stores this year,
and when you have a business model
that involves small footprint stores
without a lot of embellishments or bells and whistles,
a company can do that quickly and they can do it cheaply.
- [Narrator] Dollar General is also branching out
and going in new directions.
It's been experimenting with stocking
more fresh and refrigerated food,
and moving towards urban centers.
It plans to expand Pop Shelf.
A new chain aimed at higher income, suburban customers.
- Pop Shelf, in addition to being located
in different places, it'll aim to sell things
that are more, think of more fun.
So not as much staples that you need to get by day to day,
but things like decorations, party supplies,
a little bit more fun than necessary.
- [Narrator] Dollar General says the new expansion
isn't necessarily a shift
from their overall growth strategy.
They say they can serve a diverse customer base
with stores in urban, rural, and suburban locations.
Yet, even as Dollar General expands its offerings
and target demographics,
the company expects that its core customers
will continue to be shoppers in small towns
without other options.
(fun quirky music)