Steve Montgomery

Dollar General Getting Into Beer and Wine Biz

August 20, 2010

FROM RETAILWIRE:
Dollar General has done well selling consumables in other categories so why not try its hand at beer and wine? How big a competitive threat do you think dollar stores are to other retail outlets that currently sell beer and wine?      [more...]

Beer is a destination category for convenience retailing so the threat to that and to other beer/wine outlets is real. The size of the threat is yet to be determined. Much will depend on the positioning of the category by Dollar General.

Beer is a known value category - customers know what the price is at various retailers. Dollar General will likely utilize a low margin strategy with the category. The success of this may be mitigated in some states where retailers all currently price at state minimums currently.

One of the limiting factors may be Dollar General's cooler space. While some beer is purchased at room temperature, the majority of it is sold cold from reach in or more and more from walk in coolers called "beer caves". Will Dollar General be willing to invest in more cooler space? Will it be willing to reduce the space of other chilled categories enough to develop a significant beer presence? Will it try to use it to drive traffic or simply position it to be a convenience category for its current customers. All of these will determine the size of the threat.