Will Dollar General’s DGX concept be a hit with urban Millennials?
A big dollar store chain that’s been described as “taking over rural America” is now upping its urban presence with a new store concept tailored specifically to the city.
Dollar General is expanding its test of a small store concept under the banner, DGX, a Millennial-focused concept half the size of a traditional 9,000 square-foot Dollar General, according to Bloomberg. DGX features a familiar dollar store assortment with a low-price focus and free Wi-Fi. There are currently three DGX locations nationwide, the most recent one having recently opened in Philadelphia. Others may be coming soon as part of Dollar General’s rapid planned 13,000 store expansion, which will almost double its number of existing stores.
City-dwelling Millennials continue to be a good demographic for dollar stores to court given the generation’s characteristic deal-mindedness. A recently released paper by the Federal Reserve confirms that Millennials earn less and are faced with higher costs than previous generations, as reported by CNBC.
As it tries to woo the Millennial consumer, Dollar General has begun to pilot some additional store enhancements in its main-line locations that are unique in the world of dollar stores. For instance, it recently announced that it was piloting its DG Go! app, the first scan and go system in the dollar store space. In addition to speeding along the checkout process, the app automatically applies coupons and alerts customers to deals.
As it moves into urban markets with DGX, Dollar General will find itself up against a chain it has some history with.
In 2014, Family Dollar rejected a merger offer from Dollar General based on the perceived antitrust risk. But the following year, competitor chain Dollar Tree undertook a merger with Family Dollar.
Now may be an advantageous time for Dollar General to enter the market against the chain it was once courting — especially with a better, more customer-focused and well-maintained store experience.
All has not been well for the combined Dollar Tree/Family Dollar since the merger, however. The Wall Street Journal reported early in November that Family Dollar is dragging down Dollar Tree’s overall financials.
- Rural America’s favorite store is moving into the big city – Bloomberg
- Does Family Dollar/Dollar General make a monopoly? – RetailWire
- Is a dollar store price war coming? – RetailWire
- Dollar General pilot scan and go tech – RetailWire
- Dollar Tree’s $9 Billion Problem: Family Dollar Isn’t Paying Off – Wall Street Journal
DISCUSSION QUESTIONS: What will DGX have to do to compete in urban markets that already have a significant presence from chains like Family Dollar? Will starting out with small concepts tailored to Millennials offer a significant advantage for the chain, and what can other retailers learn from that?