Dollar General is rolling out a strategy to reduce its store footprint from 9,000 sf to approx. 4,500 sf in an initiative to incorporate a new urban concept called DGX. Dollar General operates approx. 15,000 corporate owned and operate units across its portfolio, opening approx. 1,315 stores in Fiscal Year 2017. The new concept is to target millennials starting families and setting up in homes while trying to save money. The concept is expected to include a drug store, convenience store and grocery all in one!
Dollar General is introducing a concept called DGX which will have a small store footprint and target millennial customers. This is a great idea for Dollar General and one of which I have been waiting around for years to see them incorporate into their business model.
Urban stores are where some of their highest producing sales units are located. These urban areas have been challenging for DG to enter due to the square footage requirement of DG’s prototype (9,000 sf) in addition to available space at that requirement. With their traditional square footage requirements, it has challenged DG with higher real estate operating costs making it difficult for deals to pencil. Now that the retailer is looking to incorporate a 4,500 sf prototype, it will be much less of an obstacle for the retailer to enter more of these urban markets.
I am very optimistic of Dollar General and look to see them continue to be a strong retailer into the future as they continue to innovate. They make for a great tenant for many shopping center landlords due to their credit, corporate owned operation, proven target record and consistency. If implemented properly, this could be a game changer for many years to come!