Dec 06, 2021
Dollar General is planning to accelerate the expansion of Popshelf, its concept targeting suburban women, with a goal of reaching 1,000 locations by 2025.
Introduced last October, Popshelf focuses on home decor, seasonal entertaining and health and beauty, with 95 percent of items priced below $5.
The format uses continual merchandise changes and treasure-hunt items to encourage frequent trips. Depending on the time of year, the mix may include toys, throw pillows, Christmas ornaments, pumpkin-shaped disposable paper plates, balloons, bath bombs and specialty food items such as hot cocoa and cheeses for a charcuterie board, Dollar General chief merchant Emily Taylor, told CNBC.
Slightly larger than a traditional Dollar General at 9,000 square feet, Popshelf targets younger and more suburban women versus Dollar General’s rural and slightly older customer. The household income target ranges from $50,000 to $125,000 compared to Dollar General’s reach into household’s $40,000 or less. The color scheme is a more adventurous pink and white versus Dollar General’s green and yellow.
“Popshelf aims to engage customers by offering a fun, affordable and differentiated treasure hunt experience, delivered through continually refreshed merchandise, a unique in-store experience and exceptional value,” said Jeff Owen, COO on the retailer’s third-quarter conference call.
The concept builds on the non-consumables initiative at its namesake chain that is driving “meaningful improvement” in overall gross margins, Mr. Owen said. Popshelf’s annualized sales volumes for current locations is projected to be between $1.7 million and $2 million per store at average gross margins of more than 40 percent.
Popshelf has 30 locations with plans for 50 by year end, 150 at the close of 2022 and the ultimate potential of 3,000 locations. The planned expansion is “incremental” to the flagship Dollar General chain, which has 18,000 locations and the potential for 13,000 more.
The plans to roll out the Popshelf locations came a week after Dollar Tree said it had begun shifting to a $1.25 price point for most items. Dollar Tree attributed the move to inflation and “not a reaction to short-term or transitory market conditions”.
Beyond adding non-consumables, Dollar General has been bolstering margins by expanding private labels, investing in healthcare products, and insourcing fresh and frozen food distribution.
DISCUSSION QUESTIONS: What do you think of the overall appeal of Popshelf and the timing of the ramped-up launch? Which competitors will likely feel the most pressure from Popshelf in the years ahead? What will be key to its success?
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December 06, 2021 at 11:30PM
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