Dollar General is taking a new tack to win shoppers: Go after those with more dollars to spend.
The discount retailer said on Thursday it was opening the first two stores in its new ‘popshelf’ chain in the coming weeks near Nashville, and will open a total of 30 in the first fiscal year. The idea behind the chain: selling non-essential items like home décor and party items, while catering to a clientele that might balk at shopping at a Dollar General, the fast growing deep discount chain that now has 16,300 stores across the U.S.
The company said ‘popshelf’ would be targeted at households with income as high as $125,000, well above the $50,000 mark that is typical of the Dollar General customer. That’s not to say Dollar General is refashioning itself as a strip mall version of Neiman Marcus: 95% of items will be priced for $5 or less, so not that different from a Dollar General.
What will be different will be the products, which will be more discretionary, like beauty products, items for the home, Christmas decorations, supplies for crafts and even some food items for parties, such as charcuterie plates. And Dollar General says ‘popshelf’ will offer many limited-time items to foster the ‘treasure hunt’ ethos that has served chains like T.J. Maxx so well and spurred repeat visits by shoppers. At 9,000 square feet, the ‘popshelf’ stores will be slightly bigger than a typical Dollar General.
Dollar General, now a larger retailer than Macy’s by sales, has been one of the biggest winners during the pandemic, with shoppers drawn to its low prices, essentials like toilet paper and cleaning products, its improved food assortment compared to just a few years ago, and small stores close to home, historically in rural areas but increasingly near cities in recent years. Last quarter, sales rose 24.4% to $8.7 billion.
Yet one of its big priorities has been to attract more middle class shoppers without losing its core lower income shoppers. As Fortune detailed in a feature last year, that has included remodeled stores, more beauty products, an overhaul of store brands and items like Starbucks and Lego products and more fresh food, including fruit and meat in some stores.
But it’s a delicate balance to reach for those new customers without alienating or confusing the low income shopper that is Dollar General’s bread and butter, hence the ‘popshelf’ idea. Dollar General has found it could cast its net wider by created a distinct brand from its namesake stores, even with items are are still inexpensive.
The moment is all the more propitious given the weakness of rivals like Party City and the large drugstore chains. The move could also help Dollar General compete more directly with Dollar Tree, which sells all items for $1 and has a large assortment of party supplies and inexpensive food for parties. Dollar Tree’s growth has slowed in recent years.
“We are excited to introduce popshelf from a position of strength,” Dollar General CEO Todd Vasos said in a press release. He added that ‘popshelf’
would “resonate with new customers”—and ideally garner the chain more customers with more dollars at their disposal.
