Dollar General Corp., the rapidly growing discount chain with over 16,300 stores dotting the rural American landscape, wants to attract more high-income shoppers looking to splurge.
The company plans to open a new brand of stores called Popshelf that mostly sells things shoppers don’t need but might want, such as party supplies, home decor or beauty products. Stores will be in the suburbs of larger cities, with two planned for the Nashville, Tenn., area in the next few weeks and 30 by the end of next year. Items will be priced low, mostly under $5, but designed to appeal to women from households that earn as much as $125,000 a year.
A record number of stores closed in the first half of the year and 18 retailers filed for chapter 11 protection, putting this year on a pace for new highs for bankruptcies and liquidations. While many pandemic lockdowns and temporary closures have been lifted, bricks-and-mortar chains are bracing for much of the spending that moved online to stay there.
Dollar General expects even cash-strapped shoppers to like the idea of “treating themselves without the guilt associated with overspending,” said Emily Taylor, Dollar General’s executive vice president and chief merchandising officer. Executives started working on the new chain about two years ago, but the company isn’t changing course because of the pandemic, Ms. Taylor said.
Many of the categories Popshelf will sell have experienced an uptick in sales during the pandemic, such as home decor, and shoppers are likely to be hunting for bargains in a weakened economy, she said. “The need for this store is very relevant now and maybe increasingly so.”
The store will carry items such as beauty treatments, pet supplies, a “vast array of $1 items for crafting” and party supplies, including food such as charcuterie trays, she said.
Dollar General’s sales have soared throughout the pandemic, drawing shoppers either looking for deals in stores closer to home, or trying to hunt down an elusive pack of toilet paper or disinfecting wipes. In the most recent quarter, the company’s comparable sales — those from stores and digital channels operating at least 12 months — rose 19%.
Dollar General for years has worked to attract more high-income shoppers to expand its market share, often backing away from those efforts and refocusing on its rural roots. The chain’s core customers are women from households earning roughly $40,000 a year, executives say.
In recent years Dollar General has added more nonconsumable items that tend to have higher margins, such as holiday decorations and beauty products. Based on what they learned through that effort, executives felt they could attract even more affluent shoppers if they focused less on food and inexpensive everyday purchases and created a brand unassociated with Dollar General, said the company’s chief executive, Todd Vasos.
Popshelf will carry more of what retailers call treasure-hunt items, products that are only sold for short periods to encourage more frequent trips to the store, he said. The company hired a team to source products for the chain and plans to advertise on social media.
“It’s a much different concept, look and feel, than a traditional Dollar General,” Mr. Vasos said. “There is nothing wrong with that traditional Dollar General,” he added. “But customer-facing-wise, we are going to do our best to keep those two brands separated.”