Statistically, there's a good chance you're within five minutes of a Dollar General right
now. They're practically everywhere. But there's a lot that even their most devoted customers
probably don't know. Here's what you may never have heard about the ubiquitous dollar store
chain.
Cal Turner Jr, who was the CEO of Dollar General from 1977 to 2003, chronicled the story of
Dollar General in his book My Father's Business: The Small-town Values that Built Dollar General
into a Billion Dollar Company. His grandfather, James Luther Turner, moved to Scottsville,
Kentucky, and started a bargain store in 1929, the year the United States entered into the
Great Depression. Turner began buying out bankrupt stores and liquidating their stocks.
Whatever he couldn't liquidate, he sold at his bargain store. He brought on his son,
Cal Turner Sr., to help.
In 1939, after the economic landscape had stabilized somewhat, the father and son duo
put in $5,000 each to start a wholesale shop to provide goods to the retail shops. That's
how J. L. Turner and Son, from which Dollar General would later emerge, was born. After
World War II, there was a surge in production of various commodities at low prices. The
Turners took advantage.
At one point, the Turners got a great deal on a large shipment of women's underwear,
but couldn't find any retailers willing to buy it. So the Turners set up their own junior
stores in partnership with local businessmen. Eventually, their attention shifted to the
popular "dollar days" promotions they had seen at department stores.The promotions caught
on with customers, so they introduced a year-round $1-an-item concept. On June 1, 1955, they
converted their department store in Springfield, Kentucky, into a Dollar General. In 1968,
the company went public as Dollar General Corporation.
Like its customers, Dollar General is always on the lookout for bargains. Over the past
few years, the company has taken over several former Family Video stores to turn into Dollar
Generals.
"Dollar General can come in and rent either a part of our building or all of our building,
depending on what the footprint looks like."
The brand has also moved into the locations of former Family Dollar stores, Walmart Express
stores and Eagle Discount Stores, just to name a few. Business Insider reports that
Dollar General doesn't own any of its stores, which helps keep real estate costs down. With
the addition of some fixtures and coolers, a new store is ready to open at a cost of
around $250,000 — an amount that's recovered in just two years.
According to a Market Realist report from 2017, 70 percent of all Dollar General stores
were in areas with a population of less than 20,000 people. And its growth has largely
been in areas that struggle economically, with households that earn $40,000 or less
per year as base customers. These areas are also mostly areas commonly referred to as
"food deserts." According to the U.S Department of Agriculture, food deserts are places where
residents have limited access to fresh foods. Stores in these areas give the company some
of its biggest returns, John W. Garratt, executive vice president and chief financial officer
of Dollar General, said on a quarterly conference call. Since many residents in these food deserts
cannot afford to buy in bulk, Dollar General brings them in with small packages sold at
a lower price point.
Dollar stores have often been blamed for pushing out local businesses. A report by the Institute
for Local Self Reliance suggests that when a local grocery store closes, it creates cascading
negative effects in the town. For one, there's a decline in employment. Dollar stores employ
far fewer staff than grocery stores.
In Moville, Iowa, a local grocer saw a big drop in sales after a Dollar General opened
next door.
"When Dollar General first come in, right away, our business dropped, probably 15, 20
percent."
The store closed. In Haven, Kansas, a local mom-and-pop store had to shut its doors after
a Dollar General came to town, leaving dollar stores as the main source of food for the
community. Over the past few years, local governments have set policies to control the
expansion of dollar stores. Tulsa, Oklahoma, banned any new dollar store from opening within
a mile of an existing one, reports BisNow. Similar policies have been enacted in other
cities.
Perhaps in response to public outcry, Dollar General has expanded the availability of fresh
produce to 650 of its 16,000 or so stores. In 2018, the chain initiated a rapid expansion
of refrigerated spaces by remodeling stores, and a year later, it launched DG Fresh for
self distribution of fresh and frozen food. A study by University of Nevada in Las Vegas
suggests the quality of produce at dollar stores matches that of other grocery stores.
You won't just find Dollar Generals in small towns, though. Since 2016, Dollar General
has been slowly introducing small-format stores called DGX into busy downtown areas in cities
such as Nashville, Philadelphia, and Cleveland. Dollar General plans to add 20 more DGX stores
across the country by the end of 2020.
The decision to introduce these new stores with coffee stations, fresh produce, and grab-and-go
salads, came, according to the company website, after customer research
"Revealed a millennial shopper on the Company's customer segmentation for the very first time
in 2016."
Data tracker NPD reveals that three out of four millennials shop at dollar stores at
least once per year. Dollar General has also introduced furnishings, kitchenware, and party
supplies to attract higher-end customers. It has turned 41 Walmart Express Stores into
Dollar General Plus locations with an assortment of fresh food and groceries.
During the recession of the late 2000s, people gravitated toward discount stores to save
money. These habits have continued among American shoppers, even those with a high income, according
to Business Insider. Dollar General is essentially recession proof: It does well when the economy
takes a downturn, and also when things are on the upswing.
Most items at a Dollar General are priced 20 to 40 percent less than the same items
at other grocery and drug stores. Most Dollar General stores have an aisle dedicated to
products that cost $1 or less. But that doesn't necessarily mean those items are discounted.
A University of Michigan study revealed that lower-income consumers spent 5.9 percent more
per sheet of toilet paper because they weren't buying them in bulk. Lower-income buyers usually
can only afford to pay $5 for a four-pack of toilet paper, rather than shell out $24
for a 30-pack, even though the per-roll cost is constiderably lower in the bulk pack.
"I don't know if you guys know, but you're out of toilet paper."
Dollar General has around 40 private-label brands. Private labels are a win-win situation
for discount stores like Dollar General. It gives the company greater control over manufacturing
costs and the liberty to set its own prices. For a consumer, it makes a product available
at half the price of its name-brand equivalent. For example, a 32-ounce bottle of Dial soap
costs around $6.50, and a bottle of that same size soap from DG Body costs half that amount.
Consumers have less loyalty with big brands than they did in years past. In 2018, Forbes
quoted a Nielsen report that found 71 percent of Americans would consider a store brand
over a well-known brand. It's no wonder that private label sales in stores increased by
$7.9 billion between 2017 and 2019.
Check out one of our newest videos right here! Plus, even more Mashed videos about dollar
stores are coming soon. Subscribe to our YouTube channel and hit the bell so you don't miss
a single one.