Dollar General’s POpshelf Targets Inflation-Weary Suburbanites With Hundreds Of New Stores
Dollar General is continuing its plans for retail domination with the expansion of pOpshelf, the brand's attempt to sell fun and frivolous items amid high inflation.
Dollar General has announced plans to open 1,000 pOpshelf stores within the next three years, with an eventual goal of operating 3,000 locations nationwide, CNBC reported.
The pOpshelf concept, which targets suburban women in households with annual incomes of between $50K and $120K, got its start in 2020 when two stores opened in Dollar General's home base of Tennessee.
As of the end of this year, that number is expected to swell to more than 200, including 25 in Texas alone, as the company moves aggressively to court suburban shoppers. The chain is also testing opening mini pOpshelf stores inside of existing Dollar Generals, with about 40 in operation so far.
On a Dec. 1 Dollar General earnings call, Chief Merchandising Officer Emily Taylor said pOpshelf appeals to spending-conscious shoppers by offering items at a price point that doesn’t cause guilt, CNBC reported.
“The fact that we have such great value across a lot of these categories gives our customers at pOpshelf an opportunity to really treat themselves at a time where they may have a difficult time doing that in other locations,” Taylor said on the call.
Stores like Walmart and Target report shoppers are spending less on discretionary items and more on necessities as stagnant income and high inflation take a toll. POpshelf sells about 95% of items for $5 or less, in hopes of giving suburbanites the opportunity to buy what they want rather than just what they need.
These treats can include items like holiday decor, party supplies, crafting kits, jewelry, makeup and toys.
The chain’s goal of selling to higher income consumers is working at both of its concepts, as inflation drives people to seek out discounts, per CNBC.
Dollar General, with more than 18,000 stores in 47 states, has traditionally targeted lower income, more rural customers. About 75% of its locations are in small towns of fewer than 20,000 people, with average household incomes of $40K or less.
But on the earnings call, CEO Jeff Owen said customers who make $100K a year have been shopping at its stores amid economic strain, CNBC reported.
Each pOpshelf is projected to hit between $1.7M and $2M in sales annually with an average gross margin rate higher than 40%. In Q3, Dollar General’s gross profit as a percentage of net sales was 30.5%, CNBC reported.
Taylor previously said the idea for pOpshelf came from Dollar General’s nonconsumables initiative, which promotes selling items like home decor and party supplies that have a higher profit margin than food.