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Dollar General looks to expand on discount success

Janet Babin Jan 3, 2011
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Dollar General looks to expand on discount success

Janet Babin Jan 3, 2011
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Kai Ryssdal: The deficit is a whopper. Jobless rates are still high. So, so far 2011 sounds a lot like 2010 economy-wise. Shoppers are still shopping, but a lot of people have traded down to discount stores.

That bodes well for the likes of Dollar General. Today the company announced a major expansion — hundreds of new stores, thousands of new jobs. And, perhaps, a sign that companies are confident. Marketplace’s Janet Babin reports.


Janet Babin: Dollar General plans to open 625 new stores this year, a move it says will create 6,000 jobs. The retailer is like a mini-Walmart: it carries food, health and beauty products, basic apparel, all at discounted prices. And during the downturn, the name alone — Dollar General — was enough to attract newcomers.

Jack Horst: ‘Hey it’s on the way home, and I’m getting a good deal and I’m being a little more pinched with my pocketbook these days.’

That’s retail strategist Jack Horst with Kurt Salmon. He says once the new clientele got inside Dollar General, they had an epiphany.

Horst: ‘Wow, that was different than I thought. I found a wider assortment of product, a nice shopping experience.’ I know Dollar General has spent a great deal of money on updating and upgrading the store experience.

The expansion may be a sign that the upgrade was worth it. It could also mean companies are ready to unleash cash they’ve been hoarding for several years.

Standard & Poors analyst Howard Silverblatt says S & P 500 companies have a record amount of cash on their balance sheets — $902 billion as of last September. He says Dollar General’s cash outlay may give it a jump on its competitors.

Howard Silverblatt: It’s an opportunity for them in this market. The trick for them is to expand into that market without hurting their margins and keeping their customers when times get better.

And keeping those customers from going to Walmart — the big box discounter has begun experimenting with smaller neighborhood stores, like Dollar General’s.

In New York, I’m Janet Babin for Marketplace.

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