Convenience Store News - July 2018 - 54
Making Cents of the
Dollar Store Threat
How much will the infiltration of the penny-profit
channel cost convenience stores? By Renée M. Covino
IN THE GREAT RETAIL ARENA, DOLLAR STORES
are moving from the background to the
foreground, expanding rapidly and building
Two leading players, Dollar General Corp.,
based in Goodlettsville, Tenn., and Dollar
Tree, based in Chesapeake, Va., continue to
blanket North America, each now operating
more than 14,000 stores.
Savvy convenience store operators are
keeping close watch on the dollar channel,
especially now that convenience is a solid
factor in their business model.
Consider these recent news headlines:
* Dollar General cut the ribbon on a new convenience store
format, DGX, in downtown Nashville, Tenn., in January
2017. At approximately 3,400 square feet, the DGX format
is said to provide urban shoppers with a focused selection
of consumable items and instant-consumption options.
* Dollar Tree is rolling out its "Snack Zone" initiative to
hundreds of more stores after a successful launch in 214
locations. The Snack Zone encompasses cold beverages,
candy, snack cakes and salty treats, and is designed
to provide customers with a compelling assortment of
immediate-consumption products at the $1 price point
to drive incremental sales. Dollar Tree plans to add the
Snack Zone to 750 more stores in fiscal 2018.
* Dollar General plans to execute approximately 2,000
real estate projects this year, comprising 900 new
stores, 1,000 store remodels and 100 store relocations.
Last year, the retailer bought 42 former Walmart
Express small-format stores.
* For the first quarter of 2018, Dollar Tree delivered a
4-percent same-store sales increase, with growth
in both average ticket and customer traffic.
* Dollar General posted a 2.1-percent increase
in same-store sales for 2018's first quarter, along
with a 9-percent jump in profit to $364.9 million.
Given all this buzz, should c-store operators be worried about the dollar channel?
The way industry expert Keith Daniels, a partner at
corporate restructuring and investment banking firm
Carl Marks Advisors, sees it, "There is a threat, but the
size of the threat may not be that great." He says the
core product offering is a calming differentiator: C-store
assortments are typically focused on quick-service foods,
snacks and drinks, while dollar store assortments are
traditionally focused on general merchandise.
Where c-stores need to be concerned is if dollar
stores begin selling fuel. "If the price of gas is competitive, this will likely drive customers to dollar stores,
reducing c-store foot traffic and the sale of highermargin impulse purchases of food items that c-stores
enjoy," Daniels reasoned.
Looking at it from another angle, a broad assessment of the
consumer packaged goods (CPG) brick-and-mortar retail
54 Convenience Store News C S N E W S . c o m