A Look Into Dollar General's Real Estate Strategy
Dollar General Corp. continues to execute a significant number of real estate projects aimed at driving market share growth in new communities as well as in its mature store base.
This week, CEO Todd J. Vasos provided an update on these real estate initiatives during the company’s first-quarter earnings call.
Dollar General opened 156 new stores in Q1, primarily using its 8,500-square-foot formats. “Notably, the cost to build new stores has risen more than 40% since 2019, and these formats average approximately $500,000 to open, including both cap ex and inventory,” pointed out Vasos. “Despite this increase, we continue to target healthy returns of approximately 17% on average for our portfolio.”
Dollar General is focusing on new communities this year. It’s also increasing the number of operating weeks for new stores compared with prior years by pulling forward more projects even earlier in the year. As a result, the company expects to open the vast majority of its new stores within the first three quarters.
The discount retail chain is also pleased with the progress of its remodel projects. In addition to its traditional remodel program, which is called Project Renovate, Dollar General has introduced a new incremental remodel program called Project Elevate.
“This initiative is aimed at bolstering performance in portions of our mature store base that are not yet old enough to be part of a full remodel pipeline," explained Vasos. "These projects include physical asset investments as well as merchandising optimization, product adjacency adjustments and category refreshes impacting approximately 80% of the total store.”
Dollar General completed 668 Project Elevate stores in Q1 and an additional 559 Project Renovate remodels during the quarter.
While the cost of a Project Renovate remodel is approximately half that of a new store, a Project Elevate remodel costs significantly less. “Notably, we anticipate returns on both of these projects to well exceed the healthy returns generated by our new stores,” said Vasos.
The company’s goal is to drive first-year annualized comp sales lifts in the range of 6% to 8% for Project Renovate stores and 3% to 5% for Project Elevate stores. “Between these two remodel approaches, we expect to touch approximately 20% of our store base annually and to significantly improve the shopping experience within our stores, while elevating the brand and driving greater top- and bottom-line contributions from our robust mature store base,” noted Vasos.
Tuning Into Retail Media
In addition to real estate, Vasos also spoke on Dollar General’s digital initiatives, including retail media.
The company is relying on its DG Media Network (DGMN) to enable a more personalized experience for shoppers – while also delivering a higher return on ad spend for its partners. “We are excited about the potential for the DG Media Network, which grew retail media volume more than 25% in Q1 compared to Q1 of 2024,” said Vasos. “Over time, we believe we can leverage this offering to increase market share and drive profitable sales growth, while further evolving our relationship with our customers and driving greater customer loyalty within the digital platform.”
To help, Dollar General has teamed up with experiential marketing platform Recess to hyper-target customers in their everyday lives. Through this partnership, DGMN brand partners can extend their reach outside the store via community-driven sampling.
Recess leverages proprietary retailer- and audience-targeting tools in its software to pinpoint where shoppers are, whether it’s a school campus, gym or other locations. From there, advertisers can execute experiential sampling programs in which community members and leaders distribute products to attendees.
Dollar General also teamed up with rewards app Fetch to provide DGMN advertisers another high-performance solution to engage high-intent consumers. Brands can now seamlessly put their DGMN advertising spend toward Fetch rewards offers, a highly effective and efficient new ad format that’s easy to implement.
More insights into Dollar General's retail media efforts will be shared during Progressive Grocer's GroceryTech event in Dallas June 10-12. Tyler Lusebrink, director, ad sales for DGMN, will participate in an opening keynote called “The Retail Media Imperative." He'll focus on in-store applications, partnerships, and the importance of both measurement and standardization.
Meanwhile, Dollar General’s delivery partnership with DoorDash continues to exceed initial expectations for both incrementality and sales, with Q1 sales through this platform increasing more than 50% year over year.
The partnership with DoorDash has extended to the launch of Dollar General’s own same-day home delivery offering through its DG digital solutions. “We launched with approximately 400 stores late in 2024 and have now expanded the offering to more than 3,000 stores as we continue to leverage customers and associates' feedback,” said Vasos. “We believe our expansive real estate footprint uniquely positions us to offer a compelling home delivery option and ultimately become the fastest delivery alternative for customers and our communities, further expanding their access to value and convenience that saves them time and money every day.”
As of May 2, Goodlettsville, Tenn.-based Dollar General operated 20,582 Dollar General, DG Market, DGX and pOpshelf stores across the United States, and Mi Súper Dollar General stores in Mexico. The retailer is No. 16 on The PG 100, Progressive Grocer’s 2025 list of the top food and consumables retailers in North America.
