Dollar General quietly opening full grocery stores

The discount chain is testing the concept, and is already beating big-name giants on price.

By Benzinga Dec 11, 2013 4:28PM
Image: Full Shopping Cart in Grocery Store© Fuse/Getty ImagesBy Bruce Kennedy 

Discount retailer Dollar General (DG) has thrown its low-price hat into the grocery ring by challenging the supermarkets and big-box retailers in the produce business.


The Tennessee company opened its 11,000th store this past October. And, according to The Tampa Tribune, DG has quietly established about 100 grocery stores nationwide -- including 14 in the very competitive Florida market.


And the newspaper says Dollar General is giving some big-name grocery companies a run for their money when it comes to prices. The Tribune quotes data from the Kantar Retail market research showing DG beat out Wal-Mart (WMT), Famliy Dollar (FDO), Stop & ShopAldi and Target (TGT) in pure price data.


"The reputation of a dollar store comes with the territory, but we are actually not really a dollar store," company spokeswoman Crystal Ghassemi told the Tribune. "A lot of people are starting to realize that we carry a lot of the most-popular brands on the shelf."


Analyst and investor perception of Dollar General is also starting to evolve. Its share price has been on the upswing since its better-than-expected third quarter results, announced last week.


Goldman Sachs recently upgraded the company to a Conviction List "buy" from "neutral" -- noting DG's "myriad initiatives and ability to gain share as a leading low-cost operator should continue to power top- and bottom-line growth despite our cautious view across food retail."


FBR & Co. noted that, despite recent share price volatility, they believe Dollar General "is well positioned in the current consumer environment and that its strong business trends should continue. For FY14, we are modeling positive comps (driven by continued positive traffic trends and a tobacco benefit) but slightly shrinking operating margins."


And BMO Capital Markets rates Dollar General stock at "outperform." While observing that about one-third of the company's transactions involve cigarettes, those tobacco-only purchases are reportedly declining. "So DG is beginning to convert the cigarette customer into a shopper," it adds, "which bodes well for FY14."


More from Benzinga
69Comments
Dec 11, 2013 5:07PM
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I'll shop wherever I can get the most value for my money.  I have no store loyalty when it comes to stretching my dollar.  So if these guys can pull it off I'll start shopping there.
Dec 11, 2013 5:57PM
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The key to DG is not only their prices, but also their locations.  They have set up stores in rural areas, miles from the nearest grocery store or CVS/Walgreens.  We live 20 miles from the nearest Wal-Mart, 9 miles from the nearest grocery store and we have a DG less than a mile down the road.  They do a ton of business.  We've bought a bunch of stuff from them over the years and they've bailed us out more than once when we needed something and didn't want to go all the way to town - safety pins, a bandana for a halloween costume, painter's tape, mousetraps, motor oil, trash bags, birthday cards, bread and milk, cold medicine, toothpaste, dog food, diapers, etc... 
Dec 11, 2013 5:43PM
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I like Dollar General. If they put their grocery store in my area I will go. Their stores have good brand named products and their store brand products are very good.

Dec 11, 2013 7:18PM
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I shop there and I like it.. Beats Walmart prices many times and no hassles during check out.
Dec 11, 2013 6:14PM
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My wife is unable to pass a DG store without checking it out ! We have found

many good buys there.Some items are better than the chain stores.

Dec 11, 2013 5:59PM
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Dollar general for Christmas shopping.  In and out in 30 minutes.  I go after Christmas and buy there 50% off candy and cookies.
Dec 12, 2013 2:11AM
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The best part about Dollar General is I can go there without having to get all dressed up like I would if I was going to the walmart!
Dec 11, 2013 8:47PM
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FOR CONVENIENCE AND VALUE I USE OUR DOLLAR STORE WEEKLY.  SAVES

GAS, MONEY AND TIME AND ON THE RARE TIMES YOU NEED TO EXCHANGE

MERCHANDISE  THERE IS NO PROBLEM.  HAVE ENOUGH EMPLOYEES TO HELP

THE CUSTOMERS CHEERFULLY .  LIKE WAL MART USED TO BE WHEN SAM WALTON

WAS ALIVE.  COMPETITIVE PRICING ON NAME BRANDS AND THEIR CLOTHES AND

TOYS ARE BETTER THAN WAL MART JUNK.  I SAY THEY ARE NUMBER 1 IN MY BOOK.

Dec 12, 2013 1:44AM
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Dollar General is the WORST company to work for. Long hours by yourself. They lie to their employees. No respect for them whatsoever. Out dated food in coolers and on the shelves. The company doesn't care what their stores look like. Dirty floors that have stickers and nasty stuff all over them. Constantly watching employees from the office on the camera. If you work to have a lunch break you can't leave the store because there is never another so called management person to watch over things. If you are on lunch and a vendor comes in you have to punch in from lunch and go take care of the vendor, then punch out again to finish your lunch or dinner. A very unorganized company, HATE IT. Will never shop there again!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!   Will never WORK there AGAIN!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Dec 12, 2013 12:46PM
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Not a place I'd purchase perishables.
Dec 12, 2013 10:42AM
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Dollar General has positioned itself in rural communities which was a smart move.  They were never meant to be a "Dollar Store," like Dollar Tree. You can get in and out quickly and the prices are good.I have noticed many more brand names on the shelf in recent months and less expensive than local grocery. I would much rather go to DG than Walmart (10 miles away).
Dec 11, 2013 6:51PM
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I love our DGM, we shop for groceries there all the time!
Dec 11, 2013 11:27PM
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This is the store I shop at and I love it. The prices are just right, it is located like 5 minutes from my home. And there's also a Wal-Mart  and Wal- Green about 10 minutes away.
Dec 12, 2013 10:33AM
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I went to the store in Niles Ohio and was very impressed with the quality and prices, They need to come to Farrell PA and train the management in that store because any time you go into a store and the manager is outside smoking cigarettes and on the stores cordless phone when the cashiers need help than you have a problem.
Dec 12, 2013 10:06AM
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I would shop there. I love the Dollar General in our small town. 
Dec 11, 2013 8:49PM
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     AS LONG AS THEY HAVE SCOOTERS FOR HANDICAP ILL TRY IT.
Dec 12, 2013 9:11AM
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The Dollar stores are not always cheaper places to buy items. Long gone are the days when everything cost only a dollar. However one does not have to stand in line for a half hour to check out and to me that is sometimes the price i pay just to get and go.
Dec 11, 2013 6:46PM
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Dollar General does  have very good locations and the prices are fairly good on some items. They are able  to keep their prices somewhat low because they pay their employees very little. They have no loyalty what-so-ever towards employees. I used to be a good customer, but with what I know about their practices, I will no longer patronize their stores.

Dec 12, 2013 11:02AM
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good luck to them...

what helps the consumer is good competition. as long as they play by the rules and don't kill competition through bad trade practices, then I hope they make a go of it.

Dec 12, 2013 9:38AM
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I don't think dollar store really beats any price when it comes to the ounces and weigh of the product. I do pick up some stuff but I do my major shopping at other store who I think offers better price when it comes to the size of the product I am buying. Just because it cost a dollar doesn't meant you are really saving. Some of these dollar store are really in fact charging more for their product and I think you just have to be reasonable on what you are buying and just because it says Dollar doesn't mean I am saving on what I buy. Just my thought. have a good day.
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