DG - Dollar General Continues on Positive Track
Dollar General deliveries at least met plan during FY4Q19, driven by the chain's well-executed focus on adding new doors in underserved rural locations while using door count clout to increase supplier costs for in-store and online promotions.
Three suppliers also said Dollar General made recent gains in margins by charging suppliers more to do business with the chain. Two said recent increased charges included added costs for advertising within in-store flyers, higher yy promotional support and allowances for remodels and resets. One supplier said Dollar General recently enacted a new additional ecommerce fee. "Dollar General is very tough in getting suppliers to pay for ads and discounts for new items, whereas Family Dollar is not quite as organized and does not execute as well. That could change as Dollar Tree and Family Dollar buying operations merge,” one said.
Orders: Orders for February-April deliveries increased yy for three of five suppliers, remained the same for one, and decreased for one. Suppliers with increased deliveries said door expansion and anticipated traffic gains boosted orders. “Dollar General continues to open new stores, and our sales accelerated compared to FY3Q19. Since they are not bound by the $1 price point, we plan to try to add more items in 2020,” one grocery supplier said.
One apparel supplier said trends are expected to remain steady during February-April but anticipated an increase in May-July deliveries as Dollar General planned to add additional seasonal apparel yy. One beauty supplier with lower February-April deliveries yy anticipated May-July deliveries to increase as the supplier planned to add SKUs.
"The dollar channel is recession-proof. These stores will do better in a recession."
"Dollar General charges us all these allowances to remodel and build new stores. Family Dollar and Dollar Tree do not do this -- they are pretty dead net."
"Dollar General wants retail prices that are the same as ALDI [GmbH & Co. Kg], but Aldi doesn’t have all these chargebacks.”
"Dollar General is a year-to-year commitment [in private label]. Typically, they bid out every category each year to get the best pricing."