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Dollar General’s Q4 results are cluttered
Discount retailer reported a nice increase in consumable products, but non-consumables have turned into a problem
2 Min Read
Dollar General needs to figure out a way to boost non-consumable product sales.Getty Images
Dollar General has a fresh approach, but first it must commit to a shinier show floor. If presentation is everything, then the clutter seen at most stores could be straying shoppers away from non-essential items.
It is hurting Dollar General’s bottom line. The retailer makes more money with non-consumable products, and in the fourth quarter of 2022 the growth just was not there. Homeware and seasonal items were up just 3.1% and 5.7%, respectively, while apparel took a 7.3% dive.
Neal Saunders, managing director of GlobalData Retail, told Insider Dollar General’s cluttered look could be turning off shoppers. He said the aim should be to entice consumers with displays … to wow them.
The average Dollar General shopper, who continues to deal with inflation, also is relying more on borrowing to buy those consumable goods. During Dollar General’s fourth quarter financials meeting, CEO Jeff Owen said the average discount store buyer is using money they get from friends, savings and credit cards.
Consumable revenue in the fourth quarter provided good news as it increased almost 23%, but shoppers are basically using Dollar General as a way to get by and not truly live. Traffic also was down during the final quarter of 2022.
Dollar General is showing a commitment to try and drive up non-consumable purchases in the coming months, announcing that it is investing $100 million in labor as a way to improve the in-store environment.
As for the fresh approach, Dollar General said it will offer fresh produce in 5,000 stores by the end of 2023, and that number will increase to 10,000 in the coming years.
Dollar General was looking at FY 2022 increases of 4-4.5% for same-store sales, and actual data came in at 4.3%. Dollar General is not expecting FY 2023 to be a banner year, projecting same-store sales growth in the range of 3-3.5%.
Dollar General announced it was extending its financial service offerings, which includes a cash back option for consumers.
The retailer is partnering with Denver-based Ibotta, a provider of cash back rewards technologies, to give shoppers rewards on thousands of items at its more than 18,800 stores in 47 states.
As part of the partnership, Dollar General joined the Ibotta Performance Network (IPN), a digital network that delivers coordinated promotions across retailer platforms, large third-party publisher sites, and Ibotta’s direct-to-consumer properties.
Dollar General is the first retailer in its channel to join the IPN.
In reporting financial results for its fiscal third quarter, the company said it experienced unexpected delays in acquiring enough temporary warehouse space to meet its inventory needs, which included early shipments of seasonal goods. This resulted in higher costs, including fees incurred for delays in returning shipping containers and increased transportation costs related to supplying stores less efficiently.
