Dollar General Increasing Pay, Lowering Price and Adding Perishable Goods

As its investors question if the footprint of Dollar General is becoming too large, the retailer must prove its new stores are not the only method of growing sales. To do that, the chain is doing things similar to Walmart.

After another drop is sales growth across its established stores, Dollar General outlined on Thursday a strategy it says will drive the business moving forward.

While its new plan includes another 1,000 stores in 2017, it incorporates investments that should increase performance at stores in existence.

Dollar General knows it is not just about price and nothing more. To help with making cleanliness better and the availability in stores of different products, the discount retailer will take a hit of 16 cents a share to increase compensation to its managers and increase their training.

In stores where changes have already been implemented, Dollar General has seen much less turnover amongst its managers as well as hourly employees, said Todd Vasos the CEO during an earnings call. Those same locations have also experienced an increase in sales as well.

The decision comes after an investment of $2.7 billion by Walmart into more training and an increase in pay for employees, which many credited for the chains higher scores in customer service.

A price war is taking place in retail and that includes at Walmart as well as Dollar General. Just after the country’s largest retailer Walmart announced it was moving faster to bring down its prices, Dollar General announced price cuts on scores of items in more than 17% of its locations.

The locations performed better that the chain, on average, since the price cuts were announced.

While Dollar General will continue to monitor its prices, it does not anticipate cutting prices any further said it’s CEO.

The food offering at Dollar General is usually heavily skewed toward its packaged foods. However, as customers ask for options that are healthier, the discount retailer sees additional opportunity in bringing in more perishable items.

The company already has started testing fresh produce at some of its locations, including 41 that it purchased last year from Walmart after it closed its Walmart Express store format.

Dollar General is now going to expand that format to some smaller shops it has.

Fresh produce has become a key piece of Walmart’s turnaround plan and it appears that Dollar General sees that it is working.

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