Dollar General has big expansion plans for its next few years.
These plans include the acceleration of its pOpshelf store concept, which it rolled out last year and expects to nearly triple the store count of next year. During Q3 2021, the company added 14 new pOpshelf locations, bringing the total number of stores to 30.
The stores have a bright, playful atmosphere and primarily contain merchandise priced at $5 or less, including seasonal and home décor, health and beauty, party goods, and entertaining needs. They aim to offer shoppers a fun, affordable and differentiated treasure hunt experience, delivered through continually refreshed merchandise, a unique in-store experience and exceptional value.
Given the sustained and positive performance of the pOpshelf concept, the retailer expects to open approximately 1,000 pOpshelf locations by the end of its fiscal year 2025, which ends January 30, 2026.
“Importantly, we anticipate these new pOpshelf locations will be incremental to our annual Dollar General store opening plans, as we look to further capitalize on the significant growth opportunities we see for both brands,” said CEO Todd Vasos.
“We continue to be very pleased with the performance of our pOpshelf stores, which have far exceeded our expectations for both sales and gross margin,” said COO Jeff Owen. “In fact, we anticipate year one annualized sales volumes for our current locations to be between $1.7 million and $2 million per store and expect the initial average gross margin rate for these stores to exceed 40%.”
Earlier this year, Dollar General also launched a new store format combining its DG Market and pOpshelf concepts for a hybrid store-within-a-store layout. So far, the retailer has opened 14 store-within-a store concepts. In 2022 Dollar General plans to open approximately 100 additional pOpshelf locations, bringing the total number of pOpshelf stores to about 150 by year-end, as well as up to an additional 25 store-within-a-store concepts.
The retailer also announced it will expand internationally for the first time, opening up to ten stores in Mexico by the end of fiscal 2022 (ending February 3, 2023).
“We believe Mexico represents a compelling expansion opportunity for Dollar General given these demographics and proximity to the U.S., and we are confident that our unique value and convenience proposition will resonate with the Mexican consumer,” said Vasos. “While our initial entry in the Mexico is focused on piloting a small number of stores in 2022, we plan today will ultimately turn into additional growth opportunities in the future.”
During the quarter, the company opened 268 new stores, remodeled 486 stores and relocated 24 stores.Looking ahead, Dollar General plans to execute 2,900 real estate projects in fiscal year 2021, including 1,050 new store openings, 1,750 store remodels, and 100 store relocations.
Dollar General spent $779 million in Q3 2021, including approximately $33 million for information systems upgrades and technology-related projects; $384 million for improvements, upgrades, remodels and relocations of existing stores; $184 million for store facilities, primarily for leasehold improvements as well as fixtures and equipment in new stores; and $178 million for distribution and transportation related projects. The company continues to expect capital expenditures in the range of $1.1 billion to $1.2 billion.