Another retailer has thrown its hat into the healthcare ring as Dollar General announced plans this week to hire its first chief medical officer and add products such as cold and cough medication and dental supplies to its shelves.
“Our goal is to build and enhance affordable healthcare offerings for our customers, especially in the rural communities we serve,” CEO Todd Vasos said in a press release. He added that the company’s new push is inspired by customers who said they want more convenient and affordable healthcare products and services.
Will Dollar General disrupt healthcare the same way it disrupted traditional grocery in the last two decades?
Hard to say at the outset. Dollar General is not the first retailer player to dive into the game and now faces off against some very impressive competitors including CVS, Walmart and Walgreens, among others. But Dollar General brings its massive network of 17,400 stores spread across the U.S. — with significant presence in rural communities otherwise lacking in grocery stores and dedicated pharmacy locations. This means it has an entry point, and as recent action indicates, a growing interest in leveraging its massive number of stores in otherwise hard-to-access locations to do some serious vertical expansion.
The New Dollar General
Mostly known as an easily-accessible, low-cost retail outlet where consumers could find better-than-average prices on CPGs, Dollar General has grown explosively over the last two decades. As it has grown, however, its offerings have expanded. Today some 1,300 Dollar General locations, roughly 7 percent, have added fresh produce and meats with plans to potentially offer that expanded product line at up to 10,000 stores nationwide.
Upgrading their product, however, has been just a start. In recent months Dollar General locations have also moved more directly into providing medical services, providing free COVID-19 testing at select locations through a partnership with the Virginia Department of Health. The Centers for Disease Control and Prevention also recently announced it was in talks with the company about turning stores into COVID vaccine sites, though no final word has been offered on that as of yet.
The chain has also started remodeling its physical stores to make space for health-related products and offerings and has announced that as of this spring it started building larger stores to accommodate wider-ranging inventory. DG plans to open more than 1,000 new locations in 2021.
The announcement that Dr. Albert Wu has been hired as Dollar General’s chief medical officer is of a piece with the other changes and upgrades Dollar General has invested in. Wu officially joined up at the start of this week to begin his work building relationships with companies that provide healthcare products and services so the retailer can roll out its own offerings.
The hire has gotten mostly positive feedback from Wall Street analysts, who rule the move something that will “further solidify the company’s moat” as a leader among value and discount retailers, according to research noted by Jefferies analyst Corey Tarlowe. Tarlowe said that Dollar General’s shift will certainly steal market share from drug and grocery stores.
A Competitive Space
Dollar General’s entrance into healthcare and healthier offerings for consumers, if nothing else, helps the company address a giant PR problem it has at the moment: it has been accused of helping to cause food deserts for low-income consumers. Whether it is competitive with other retail offerings in healthcare is a different question.
CVS, the ranking 800 lb gorilla in the retail pharmacy space, has over 800 Minute Clinic locations it offers to consumers. Walmart, as part of its recent extensive efforts to enter the healthcare segment, announced plans to roll out its own private-label insulin. In comparison, Dollar General’s entering moves into the healthcare space are much smaller and far more provisional.
But big journeys often have small starts, and Dollar General serves a large base of lower-income consumers that even brands as large as Walmart can’t access as easily. Meaning it might just have an entry point into a large and competitive segment no one else has — if it’s looking to level up its healthcare offerings as it continues to expand.
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