CBx Daily

Clutch Your Coins As Dollar General Expands In The Suburbs

Apr 14

By CultureBanx Team

  • Dollar General is opening 50 “Popshelf” stores aimed at suburban shoppers
  • 39% of African Americans live in the suburbs

Discount retailer Dollar General (DG -0.26%) has strong ambitions to win over more high-end consumers by opening 50 “Popshelf” stores aimed at suburban shoppers by the end of its fiscal year. This shopping concept will offer seasonal and home décor, health and beauty must-haves, and 95% of the items will be priced at $5 or less. As Dollar General wades deeper into the suburbs where 39% of African Americans live, just how valuable will the Black dollar become for the company’s bottom line?

Why This Matters: Dollar General’s initial targeted customers are primarily going to be women who are located in diverse suburban communities, with a total household annual income ranging from $50,000 to $125,000. Typically, the low-cost chain has largely catered to customers on a tight budget to shop at the company’s more than 16,000 stores. Right now their average shopper comes from a household that earns $40,000 or less per year. In 2017, the U.S. Census Bureau released data showing the median income for an African American household was $39,490, putting them right in the Dollar General consumer sweet spot.

Moving to the suburbs have become increasingly more diverse, with 39% of African Americans calling the area home in 2014, according to the Brookings Institute. That’s a noticeable shift from 2000, when only 33% of African Americans lived in the suburbs, and exactly why they should be on Dollar General’s radar. Not to mention the $1.4 trillion dollars in spending power that they possessed in 2019, which is expected to grow to $1.8 trillion by 2024, according to the Selig Center for Economic Growth.

Against the unusually high sales levels caused by the pandemic, shares of the company have risen about 21% over the past year. However, the company posted Q4 earnings that missed estimates and forecast same-store sales would decline 4% to 6% in the coming fiscal year.

To keep sales going with its new Popshelf concept tapping into diverse suburbs will be key. The company’s stock has gained about 25% over the past year, bringing its market cap to more than $50 billion.

What’s Next: Even before the recession, the discount retailer was growing rapidly and this next phase of suburban growth should be just as strong. It’s not just the Popshelf stored that Dollar General is expanding, it plans to open 1,050 stores, remodel 1,750 sites and relocate 100 others in 2021.

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