The retailer with the most stores in the U.S. has decided it could use a few less.
Dollar General announced yesterday it was closing 400 underperforming locations, stepping up its efforts to upgrade existing stores and adding a new president and chief operating officer to lead the company through it all. The company also announced it was doing away with its "packaway" inventory management plan that kept slow-sellers on the shelf while the company marked down prices. Analysts claimed that the "packaway" approach failed to move product and kept Dollar General stores cluttered with stale merchandise.
David Perdue, chairman and CEO of Dollar General, said in a press release, "These strategic changes are designed to enhance the shopping experience for our customers and put the company on a solid foundation for profitable and sustainable growth in the future. Fiscal 2007 will be a year of transition for us as our team will be highly focused on executing this plan. We expect these changes will ultimately strengthen our store base, improve our long-term profitability and create value for our shareholders."
David Bere' will be in charge of leading Dollar General through its transition period. The new president/COO most recently served as executive vice president of Ralcorp Holdings and has been on the Dollar General board of directors for the past four years.
Dollar General operates roughly 8,000 stores in 35 states.
Discussion Questions: Has Dollar General and the dollar store industry reached the point of saturation with the number of stores in operation? What do you see as the keys for growth for the industry and top operators (Dollar General, Family Dollar, Dollar Tree and 99 Cents Only)?
Do you expect the number of dollar stores in operation to increase or decrease in the future?