Photo: Dollar General
Is BOPIS a good fit for Dollar General?
In coming months, Dollar General will become the first dollar store chain to test BOPIS at select stores. The service will initially be offered through the DG GO! mobile app.
Dollar General was late to the game in launching e-commerce in 2011 but continues to invest in its digital strategy largely through its app, including recently adding digital coupon push notifications. About 75 percent of the chain’s stores offer Cart Calculator, a feature that allows customers to use their phones to scan items as they shop to see a running tab. Mobile checkout is just starting to be rolled out.
Approximately 45 percent of Dollar General’s shoppers use digital tools from the retailer or other merchants when they shop, according to the company. “Digitally-engaged customers” check out with baskets twice the company average, although Dollar General’s average basket size is $12 or less, containing five items or less on average.
On Dollar General’s second-quarter conference call in August, CEO Todd Vasos, said the smaller basket size is the reason for a “slow” test of BOPIS.
“It’s a little bit different shop than what you would find in a big box retailer. And so buy online pick up in-store will be no different. It will be a different shop,” Mr. Vasos told analysts. “But what we believe we can do is offer her another leg of convenience. So that she can come to the store, pick up what she needs, probably add an item or two to her online pickup and then be able to get out very, very quickly.”
For Walmart and Target, online, backed by aggressive BOPIS efforts, has been by far their fastest growth channel and is seen as a competitive advantage against dollar stores.
The primary reason BOPIS is expanding in appeal is because consumers want to avoid delivery costs. Secondary reasons are to receive their goods faster and take advantage of promotional offers.
A Wall Street Journal article exploring Dollar General’s move said adding BOPIS provides some convenience and may appeal to younger consumers who expect such services. But it also noted Dollar General’s stores are easy to navigate for in-and-out shopping versus cavernous big boxes.
- Dollar General Corporation Q2 2019 Earnings Call Transcript – Seeking Alpha
- Dollar General Boosts Digital Strategy – The Wall Street Journal
- Dollar General Works On Buy Online, Pick Up In-Store Feature – Pymnts
- Inside the conflict at Walmart that’s threatening its high-stakes race with Amazon – Recode
- Dollar General pilots scan & go tech – RetailWire
- Dollar General Goes Online – RetailWire
- Dollar General is threatening Walmart’s brick-and-mortar empire – Business Insider
- Dollar Stores May Not Be Able to Get Away Without E-Commerce Much Longer – Bloomberg
Discussion Questions
DISCUSSION QUESTIONS: Will BOPIS offer much appeal to the dollar store shopper? Is BOPIS a service Dollar General has to offer to support online selling and compete with big box stores?
Poll
BrainTrust
Susan O'Neal
General Manager, Promo Intel & Insights, Numerator
Richard J. George, Ph.D.
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
If Dollar General wants to be in e-commerce then BOPIS makes more sense than delivery, which just wouldn’t be economical for a dollar store. However if this takes off in a serious way, then Dollar General might need to review staffing as this will take a toll on associates’ time – which is already fairly tight across the chain.
I agree that this is the specific reason that BOPIS makes sense for Dollar General. Let the customer do the work and save Dollar General the money!
The convenience of BOPIS has the potential to appeal to every customer, so it makes sense for Dollar General to get in the game. BOPIS is becoming another mandatory, consumer expected service, like taking credit cards and accepting returns.
If BOPIS works for QSRs like McDonald’s and Starbucks, where item counts are even smaller than traditional dollar or convenience stores, it can work for Dollar General. Furthermore, Dollar General has an above-average basket size compared to a true “dollar store” because of its broader merchandise selection – filling in gaps in rural areas where the nearest grocery store is 30 minutes or more away. As such, it is by its nature a seller of convenience as well as price. BOPIS would be an extension of that same value proposition. Dollar General has done an excellent job with its digital service offering and I believe they have the customer trust to make BOPIS successful.
I agree that it may be necessary if they want an online presence. I can’t see it being a big thing – largely due to Neil’s point about increased staffing needs for an organization that runs lean.
I have serious doubts whether the target audience for dollar stores is interested in online shopping at all and if they are, Walmart already has their share of wallet and isn’t going to give it up without a fight. It’s much better for the deep discounters to do everything they can to get shoppers into the store and keep them there. Spending resources on traditional and digital marketing would give them a better ROI.
I agree. Staffing at the dollar stores is sparse now. Having them use checkout time to draw orders does not make good sense. Nor does the size of the orders make them competitive with others using BOPIS. Walmart is a good example.
BOPIS is a natural fit for dollar stores in general and for Dollar General in particular. In fact, BOPIS is more attractive to smaller footprint stores. Dollar General’s 7,000 square foot stores provide for easy access and the related convenience of additional purchases; many of which will be the variety of impulse items at the front of the store. In addition, if so desired, a shopper picking up a BOPIS order could visit the entire Dollar General store in about the same time it takes to shop one aisle in a traditional supermarket or half an aisle in a supercenter.
However the real advantage of BOPIS is that a customer is resetting his or her mental cash register to zero, thus giving the shopper permission to spend more money. Think of traditional supermarket shopping — the fullness of the shopping cart is a barometer of spending. An empty cart or basket is perceived as a new start.
I predict the Dollar General experiment will become a chain-wide success.
BOPIS is a great fit for Dollar General. As others have noted, delivery isn’t economical for a dollar store with tight margins. But BOPIS offers shoppers an easy way to pick up errand items on-the-go. BOPIS also helps customers ensure the items they need will be there before they make the trip to the store, which is important for every shopper.
Staffing will be key. If staffing does not support the ability to execute a BOPIS customer shopping experience then the offering will do much more damage than good. Beware of bright shiny objects!
Context. Never in our history has more cash been in circulation. Most of our economic measurement tools are anchored in the 20th not the 21st century. In the U.S. and particularly Europe the gray and black economies are largely unmeasured. Not a bad idea – but not a perfect fit either…
It’s a competitive advantage over similar formats, and I believe that as the convenience becomes known or is promoted, it will draw new customers to the franchise.
The store format occupies a very specific space in the consumer’s mind, and eventually it might erode some sales from the big box stores, but the low price low margin space has been owned by dollar stores for quite some time now.
Of course BOPIS will work for Dollar General. My concern for these stores is the fact that BOPIS could shrink foot traffic within the whole store, thus creating sales per transaction decreases. People walk through Dollar General stores and find items and treasures they would have never thought of buying. So foot traffic, the life blood of a store, may be adversely affected, which is not favorable. Dollar General must focus on how to pull more people into the selling floor, with a mission to create an improvement in sales dollars per transaction. To do this, Dollar General must be well merchandised and ready to implement a great signage program that will entice those BOPIS customers to walk in and through the store. But too much signage becomes air pollution in a store, and that hurts traffic. Get the equation right and this can come off as a very positive revenue generator for Dollar General.
Just as next-day shipping has become the battleground for retailers, the ability to set up a BOPIS operation has become a ubiquitous part of the in-store retail experience. The brilliance of BOPIS is that it empowers the consumer to control the shopping journey across digital channels, incentivizes them to come into the store, pick up the products, and potentially buy additional full-priced items.
However for BOPIS to make a meaningful impact on both Dollar General and retailers’ bottom line, it all comes down to execution. Setting up a BOPIS operation implies that there will be a sense of, dare I say, seamlessness, with a dedicated pickup location, store associates ready and able to help, and a clear path to buy additional products. It’s not just about setting up BOPIS and hoping all will go well.
BOPIS could work for deep discounters, but they need to design their digital platform differently than Amazon or Walmart. It needs to have the “voice” of the store embedded in the design and content. Prices should be the focus and a “compare with the competition” graphic would be very effective. If their sites are too close to others players, they will quickly get lost in the shuffle.
The whole point, or perhaps I should say one of the main M.O.s of a dollar store is ruthless minimizing of staff (though of course they compete with many other firms in this regard). It’s hard for me to see how a labor intensive practice like BOPIS can (ever) work in this kind of low cost/margin business … not that many won’t be willing to lose money verifying it.
BOPIS is well liked and used much by consumers and is becoming expected. Dollar General is beginning to meet the expectations. It will likely increase sales as shoppers already in the store for BOPIS pickup. While the item selection at Dollar General is less complex, it will still offer the service consumers demand and expect.
I see a lot of comments on how can DG afford the manpower to run with BOPIS. The real question should be, how much they will save? Integrated retail saves more money than you’d think and will likely increase customer spending. Customers who shop online won’t require assistance for price checks or product information. Store recovery will become minimal as more customers simply go inside the store only to pickup their orders. More digital coupons will be used and protect from counterfeit coupons (coupons are money). Considering everything if you have very well trained talent in these stores, this move will decrease the amount of required manpower for the store to operate, and increase efficiency along the way.
This question won’t age well. BOPIS is becoming table stakes in providing a well harmonized shopping experience. The bigger question, notwithstanding others’ comments about some of the operational challenges is, what took them so long?
Ignore customer expectations at your own peril. Table stakes for sure. Something essential for any retailer operating in these times. Of all the possible operational challenges for BOPIS, DG’s biggest in my opinion is inventory accuracy. If anything like most other retailers the customer backlash for not having in that store what the customer orders will be swift and vicious.