Dollar General: self-distribution may speed produce roll-out

Goodlettsville, TN-based Dollar General BB #:172794 continues to ramp up fresh produce offerings in its stores, as the company opened its 17,000th store in the U.S.

During the company’s third quarter earnings report on Dec. 3, executives said stores with fresh produce also passed another milestone.

“We also added produce in more than 140 stores, bringing the total number of stores which carry produce to more than 1,000,” said COO Jeff Owen, during the call. “We plan to add produce in approximately 600 stores, and we expect approximately 50% of our new unit openings and about 75% of our remodels to be in the Dollar General Traditional Plus or Dollar General Plus formats.”

Dollar General is on track to open more than 1,000 new stores and remodel 1,750 stores in 2021.

The company also is building its first ground-up DG Fresh distribution center, expected to open in 2022.

“And, while produce is not included in our initial rollout plans, we plan and continue to believe DG Fresh could provide a potential path forward to expanding our produce offering to even more stores in the future,” said CEO Todd Vasos during the call. “In total, we were self-distributing to more than 13,000 stores from eight DG Fresh facilities at the end of Q3. We expect to capture the benefits from this initiative in more than 14,000 stores from 10 facilities by the end of this year.”

Self-distribution has brought many operational efficiencies that the company hopes to realize in produce as well, said John Garratt, executive vice president and CFO.

“Longer-term, we see that as the opportunity to unlock further expansion of produce to more stores, and so we think it’s the gift that keeps on giving, both in terms of cost and margin, but also in terms of sales,” Garratt said, during the call.

Read the company’s earnings report here.

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