As a savvy shopper always on the prowl for the best deals, I know that Dollar General is a top destination for snagging everyday essentials at unbeatable prices. With 18,356 stores across 46 states as of February 2022, this discount retail powerhouse has built a loyal following among budget-conscious consumers.
However, Dollar General is far from the only game in town when it comes to stretching your hard-earned dollars. A host of formidable competitors are also vying for the attention and wallets of frugal shoppers. As a retail industry expert and veteran bargain hunter, I‘m here to give you the inside scoop on the chains giving Dollar General a run for its money.
The State of Discount Retail
Before we dive into the head-to-head matchups, let‘s set the stage with some context on the discount retail landscape. This sector has been on a tear in recent years, with budget-focused chains posting impressive sales growth and ambitious expansion plans.
In 2021, Dollar General‘s net sales jumped 1.4% year-over-year to a record $34.2 billion. Rival Dollar Tree Inc., which operates both Dollar Tree and Family Dollar banners, saw consolidated net sales rise 3.1% to $26.3 billion.
The growth comes as financially strained consumers increasingly seek out value and convenience, a trend that has only accelerated in the wake of the COVID-19 pandemic and recent inflationary pressures.
"The current economic environment is driving more higher-income consumers into the dollar stores," Scott Mushkin, CEO of R5 Capital, told CNBC. "The dollar stores are capturing more food stamps as inflation has increased, pushing lower income consumers to the chains."
Head-to-Head: Dollar General‘s Biggest Rivals
So which discount retailers are giving Dollar General the biggest headaches? Here‘s a rundown of the company‘s most notable competitors, along with my take on how they stack up from a budget shopper‘s perspective:
1. Dollar Tree / Family Dollar
With 15,685 stores across 48 states as of January 2022, Dollar Tree is arguably Dollar General‘s most direct rival in terms of store footprint and format. Like Dollar General, Dollar Tree attracts shoppers seeking no-frills, low-price options for food, snacks, cleaning supplies, health and beauty products and seasonal goods.
While Dollar Tree long stuck to a rigid everything-for-$1 model, mounting cost pressures led the company to hike its base price to $1.25 in late 2021 – a move Dollar General has yet to match. Meanwhile, Dollar Tree‘s Family Dollar chain employs more of a multi-price approach akin to Dollar General.
As a shopper, I appreciate Dollar Tree‘s expansive party supply and greeting card selection, which helps it stand out for affordable one-stop occasion shopping. However, I often find Dollar General‘s overall product mix more practical and useful for everyday needs.
One edge Family Dollar has developed is the addition of freezers and coolers to more than 5,000 locations. Fresh and frozen food drives trips and bigger baskets – a key priority for Dollar General as well.
2. Walmart
While Walmart‘s cavernous supercenters are a far cry from Dollar General‘s compact discount stores, there‘s no denying the two retail giants are battling for the same budget-focused consumers.
With 4,742 stores across the US, including smaller-format Neighborhood Markets, Walmart casts a wide net. The big-box behemoth‘s vast product assortment and "Everyday Low Prices" are a magnet for one-stop shoppers.
Personally, I‘m prone to hit up Walmart for extensive pantry loading and when I need to pair groceries with general merchandise like electronics or apparel. But for quick fill-in trips and impulse buys, I‘m more likely to pop into Dollar General and get in and out fast.
Walmart has the edge on e-commerce and omnichannel services, which became a lifeline for many shoppers amid the pandemic. Dollar General has been slower to embrace digital, though the company is now investing in initiatives like an app with scan-and-go checkout.
3. Aldi
The German discount grocer is on a rapid US expansion tear, currently operating over 2,100 stores across 38 states. Though best known for its low-price leadership in private-label groceries, Aldi also competes with Dollar General in non-food categories like household cleaners, paper goods, and pet supplies.
Aldi‘s firm command of its highly efficient supply chain enables it to undercut rivals on price while still maintaining healthy margins. Selling mostly private brands and displaying items in their shipping packaging are other cost-saving tactics I appreciate as a thrifty shopper.
In my local area, Aldi is my go-to for stocking up on pantry staples, frozen foods, and produce. But Dollar General still gets my business for non-grocery items, as I find Aldi‘s selection more limited in those departments.
Both Aldi and Dollar General are making aggressive moves to expand their fresh food offerings to drive trips and steal share from conventional grocers. As Aldi ramps up its US footprint, the pricing pressure on Dollar General will only intensify.
Other Notable Players
Beyond these three heavyweights, a slew of other discount retailers are also elbowing for market share and consumer mindshare. Here‘s a quick hit list of other Dollar General competitors on my radar:
| Retailer | Store Count | Key Facts |
|---|---|---|
| Five Below | 1,000+ | Extreme-value chain aimed at tweens and teens, mostly $5 and under |
| Big Lots | 1,431 | Closeout retailer with wide range of furniture, seasonal, food |
| 99 Cents Only | 393 | Deep-discount chain concentrated in CA and the Southwest |
| Lidl | 150+ | Another fast-growing German discounter with small-format grocery stores |
| Grocery Outlet | 425+ | West Coast extreme-value grocer expanding east to new markets |
The Post-Pandemic Value Landscape
The COVID-19 crisis forced significant shifts in shopping behavior that are still playing out in the competitive discount space. Some developments, like the e-commerce boom, play more to Walmart and Target‘s strengths. But other trends have been a boon for Dollar General.
Consumers consolidated shopping trips and favored contactless options like BOPIS (buy online, pickup in store) in the pandemic‘s early days. But as restrictions eased, many shoppers returned to more frequent, spontaneous store visits.
"We‘re watching the beginning of a multiyear consumer shift toward value," Jefferies analyst Corey Tarlowe told Fortune. "Dollar stores are going to be one of the key beneficiaries of that."
Indeed, Dollar General saw its net sales jump 21.6% to $33.7 billion in 2020, proving its recession-resistant model. In 2021, sales moderated to $34.2 billion but still grew year-over-year even as government stimulus waned.
Future of the Fight for Frugal Shoppers
As I look to the future of discount retail, I see several key trends and factors that could shake up Dollar General‘s competitive standing:
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Continued expansion: Dollar General plans to open 1,110 new stores in 2022, while Dollar Tree/Family Dollar will add nearly 600 locations. This will further saturate the market and heighten competition in new trade areas.
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E-commerce and omnichannel: As online grocery and BOPIS options become table stakes, Dollar General will need to boost its digital capabilities to keep pace with the likes of Walmart and Target. The recent launch of its app is a step in the right direction.
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Supply chain challenges: Rising costs, inventory shortages, and other supply chain disruptions will likely persist in the near term. Retailers‘ ability to keep shelves stocked and prices low amid these pressures will be critical.
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Assortment and private label: Dollar General‘s recent rollout of more fresh and frozen foods, as well as additional private brands, should help drive differentiation and loyalty. Expect rivals to also lean into unique product mixes.
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New formats and partnerships: Interesting store concept tests like Walmart‘s Quibo in Puerto Rico and Dollar General‘s Popshelf expansion could redefine the discount competitive set and bring new rivals into the mix.
For all the dramatic change and intense competition, I believe one fundamental fact will continue to drive the success of Dollar General and its peers: the eternal appetite for a great deal. With inflation at 40-year highs and economic uncertainty on the horizon, consumers will prioritize saving money now more than ever.
"In tough times, value retail can be part of the solution to help families stretch their dollars as far as possible," Dollar General CEO Todd Vasos told investors in the company‘s Q4 2021 earnings call. "I believe we are well-positioned to be the retailer of choice for value and convenience."
Those words ring true to this deal-hungry shopper. And while I‘ll certainly continue to spread my spending across multiple banners, I expect Dollar General will remain a vital weapon in my bargain-hunting arsenal for the foreseeable future.
