Dollar General Corp. may be giving Wal-Mart fits in some areas, but Richard Dreiling, chairman and chief executive officer of the Goodlettsville, Tenn., chain, isn’t willing to talk about it.
“Rather than comment on a specific competitor, I would rather take a more holistic approach and say that, during tough times, it always gets competitive at retail,” he said during a quarterly conference call last month.
“I can tell you that we understand our pricing better than we ever have before, and if you look at what we’re doing with our margin and our cost, we’re better positioned to compete than we ever have been before. It’s all about consistent pricing that the customer knows they’re going to get every day. The consumer today is bombarded with information, and all they want to know is what is it going to cost every day, and we think that’s our strength.
“We are pretty comfortable with our pricing in relation to [Wal-Mart].”
Deborah Weinswig, an analyst with Citigroup, New York, said Dollar General does not believe it competes directly with Wal-Mart, which goes after stock-up trips, vs. fill-in trips at the dollar store chain.
“However, stores like Dollar General have a unique proposition vs. Wal-Mart because the perception is they have the cheapest prices, even though that is not true across the store. But based on the store’s low price points, cash-strapped consumers can walk out the door with most items they need, rather than fewer items in bulkier sizes at Wal-Mart.”
Dollar General operates close to 9,000 stores across 35 states. Of that total, nearly 1,500 will be operating with the company’s new consumer-centric prototype by the end of the year — a more shoppable format with wider aisles, better merchandise adjacencies and expanded refrigerated sections, plus upgraded decor and better sight lines, that has been delivering greater sales productivity, Weinswig noted.
The chain is testing beer and wine sales in Florida, Tennessee, South Carolina “and a couple of other states,” Dreiling said, “and it’s a good initiative for us, but like everything else, we’re taking our time and getting it done right.”
Dreiling said he believes the recession has been a boon to his company’s business.
“It is evident consumers continue to make significant behavioral changes in their spending habits as a result of the difficult financial realities that many continue to face — I think it’s fair to say most consumers have reset their spending norm,” he told investors.