As a retail analyst and expert on consumer behavior, I‘ve spent years studying the strategies that successful companies use to win over shoppers. And when it comes to the world of discount retail, few players loom larger than Dollar General. With over 17,000 stores in 46 states, this bargain behemoth has quickly become a go-to destination for budget-conscious shoppers looking to stretch their dollars on everything from home goods to personal care products. But in recent years, one particular category has emerged as a surprise star on Dollar General‘s shelves: groceries.
The Rise of the DG Grocery Empire
Dollar General‘s foray into the food business has been nothing short of remarkable. What started as a small experiment with coolers and freezers in a handful of stores has exploded into a multi-billion dollar enterprise. In 2020 alone, Dollar General‘s grocery sales topped $10 billion, accounting for more than 22% of the company‘s total revenue. That‘s up from just 8% of sales a decade ago.
So what‘s behind this massive growth? For starters, Dollar General has made a concerted effort to expand its grocery offerings and remodel its stores to accommodate more fresh and frozen foods. As of 2021, around 16,100 of Dollar General‘s 17,000+ locations now feature refrigerated sections, up from just 5,000 stores in 2012. And the company shows no signs of slowing down its grocery push, with plans to add produce sections to more than 1,000 stores and build dozens of new locations with a larger food focus.
But it‘s not just about the quantity of food on Dollar General‘s shelves. The company has also made strategic moves to improve the quality and variety of its grocery assortment. In 2020, Dollar General launched a new private label brand called Clover Valley Farms, which includes a range of dairy products, baked goods, and pantry staples. The brand has quickly gained a reputation for offering good value and surprisingly high quality, earning positive reviews from customers and industry experts alike.
The Incredible, Edible, Affordable Egg
Perhaps no single item embodies Dollar General‘s grocery success story quite like the humble egg. As a registered dietitian and nutrition coach, I know that eggs are one of the most affordable and nutrient-dense foods on the planet. Packed with high-quality protein, healthy fats, and essential vitamins and minerals, eggs are a staple in countless recipes and a go-to choice for budget shoppers looking to feed their families on a dime.
And when it comes to egg prices, Dollar General is often the cheapest game in town. While exact costs can vary by location and market conditions, a typical dozen of Clover Valley Grade A Large Eggs will run you about $1.35 at Dollar General. That‘s significantly cheaper than the average price at many other major retailers:
| Retailer | Average Price per Dozen |
|---|---|
| Dollar General | $1.35 |
| Walmart | $1.63 |
| Aldi | $1.75 |
| Target | $1.89 |
| Kroger | $2.09 |
| Albertsons | $2.19 |
Sources: Basket (retailer price comparison app), Walmart.com, Target.com, Aldi.us, Kroger.com, Albertsons.com (prices as of April 2021)
So how does Dollar General manage to undercut the competition so consistently? Part of the answer lies in the company‘s massive scale and ultra-efficient supply chain. As one of the largest retailers in the country, Dollar General has enormous bargaining power with its suppliers and can negotiate lower prices on everything from eggs to orange juice. The company also invests heavily in its private truck fleet and distribution centers, allowing it to keep transportation costs down and get products to stores faster.
But cheap eggs and milk are also part of a larger strategy that all savvy retailers use: loss leaders. In the grocery business, staples like eggs, bread, and milk are often sold at or below cost to attract shoppers into stores. The idea is that once customers are in the door to buy their cheap eggs, they‘ll also grab some (much more profitable) impulse buys like snacks, drinks, or household goods. It‘s a tried-and-true tactic that Dollar General has perfected, using its rock-bottom grocery prices as a gateway to get shoppers hooked on its treasure hunt shopping experience.
The Dollar Store Difference
Of course, low prices alone aren‘t enough to explain Dollar General‘s grocery triumph. After all, Walmart and Aldi also have reputations for cheap eats and they‘ve been in the food game much longer than DG. So what sets Dollar General apart?
Location is a big factor. While Walmart and Aldi tend to build larger stores in higher-traffic commercial areas, Dollar General takes a different approach. The company actively seeks out smaller, underserved markets where access to fresh and affordable food is limited. These so-called "food deserts" are often lower-income neighborhoods where the nearest grocery store might be miles away or require a long bus ride.
By opening up shop in these overlooked communities, Dollar General provides a much-needed lifeline for residents who might otherwise struggle to put food on the table. And while a Dollar General store might not have the massive square footage or overwhelming assortment of a big-box supermarket, it can still cover all the basics that families need to get by.
As Denise Leach, a longtime Dollar General shopper in rural Kentucky, told me: "I don‘t always have the time or gas money to drive into town for groceries. Having a Dollar General down the road where I can grab milk, eggs, bread, and some canned goods has been a real blessing. The prices are good and the quality is better than you‘d expect."
The Psychology of Private Label Trust
Another key factor in Dollar General‘s grocery success is the surprising power of its private label brands. As a behavioral economist and market researcher, I‘ve long been fascinated by the ways that shoppers perceive and respond to store brands. While generic products were once seen as inferior knockoffs of "real" brands, that perception has shifted dramatically in recent years.
According to a 2020 survey by the Food Industry Association, 89% of shoppers now trust private label products to be as good as or better than national brands. And that trust is even higher among younger shoppers, with 93% of Millennials and Gen Z consumers saying they buy store brands on a regular basis.
What‘s driving this newfound faith in private label? Part of it is simply the improvement in quality and packaging that many store brands have undergone in recent years. Retailers like Dollar General have invested heavily in product development and quality control, working closely with suppliers to create private label lines that can compete with national brands on taste, nutrition, and aesthetics.
But there‘s also a psychological component at play. In a world where consumers are constantly bombarded with marketing messages and brand logos, the simplicity and honesty of a store brand can be refreshing. Private label products often have cleaner, more straightforward packaging and labels that emphasize value and quality over flashy claims or gimmicks.
As one Dollar General shopper told me: "I like that Clover Valley products don‘t try to hide what they are. The packaging is simple and the prices are always low. I trust that Dollar General isn‘t trying to rip me off or trick me with fake sales or coupons. What you see is what you get."
The Future of Grocery at Dollar General
So what does the future hold for Dollar General‘s grocery ambitions? If the company‘s recent moves are any indication, the answer is "full steam ahead." In addition to its ongoing store remodels and private label expansions, Dollar General has also been experimenting with new formats and services designed to make grocery shopping even easier and more convenient.
In 2021, the company launched a pilot program called DG Fresh, which brings self-distribution of frozen and refrigerated foods to more than 9,000 stores. By cutting out the middleman and delivering perishable goods directly to stores, Dollar General hopes to improve quality, lower costs, and reduce waste.
The company is also testing out larger format stores called Dollar General Plus, which feature an expanded grocery assortment and more fresh produce options. And in a nod to the growing popularity of online grocery shopping, Dollar General has partnered with delivery services like Instacart and DoorDash to offer same-day delivery from more than 9,000 locations.
But perhaps the most exciting development on the horizon is Dollar General‘s pledge to go 100% cage-free with its egg supply by 2025. As a food industry consultant and animal welfare advocate, I know that the transition to cage-free eggs is one of the most important steps that retailers can take to improve the lives of laying hens and meet the growing consumer demand for more ethical and sustainable food options.
While cage-free eggs do tend to cost a bit more than conventional eggs due to the higher production standards involved, I‘m hopeful that Dollar General‘s immense scale and purchasing power will help keep prices affordable for budget shoppers. And as more and more consumers become aware of the animal welfare and environmental impact of their food choices, offering a low-cost cage-free egg option could give Dollar General a significant competitive advantage over rival retailers.
The Bottom Line
At the end of the day, Dollar General‘s success in the grocery business boils down to a simple but powerful formula: give shoppers what they want, where they want it, at prices they can afford. By focusing on underserved markets, leveraging its scale to keep costs low, and constantly innovating to improve quality and convenience, Dollar General has managed to carve out a lucrative niche in an industry dominated by entrenched players.
For budget-conscious shoppers and busy families, the rise of Dollar General as a grocery destination is a welcome development. No longer just a place to pick up party supplies or cheap toiletries, DG stores now offer a legitimate alternative (or supplement) to the weekly supermarket haul. And with ongoing investments in fresh foods, private label products, and e-commerce capabilities, it‘s clear that Dollar General is in the grocery game for the long haul.
Of course, no retailer is perfect, and Dollar General still has plenty of room for improvement when it comes to issues like worker pay, environmental sustainability, and community impact. But for millions of Americans struggling to put food on the table in an era of rising income inequality and persistent food deserts, the Dollar General grocery revolution offers a glimmer of hope and a reminder that sometimes, the best things in life really do come cheap.
