Dollar General Attracts All Income Groups as Economic Pressures Mount

Dollar General’s core customers are cutting back on food purchases and other household expenses due to rising gas prices and reductions in SNAP benefit payments, CEO Todd Vasos said Tuesday (June 2).

“This pressure has been more pronounced on customers in rural communities as they work to minimize trip distance and make trade-offs in their search for everyday affordability and value,” Vasos said during the company’s first quarter earnings call.

Dollar General is meeting the needs of these and other customers with a combination of value and convenience, Vasos said. He highlighted the company’s 21,000-store footprint, growing delivery presence, pricing position that is within three or four percentage points of mass retailers, and selection of more than 2,000 items at or below the $1 price point.

During the first quarter, Dollar General saw year-over-year increases of 3.4% in net sales, 2.0% in same-store sales, 1.4% in customer traffic and 0.5% in average transaction amount. Its same-store sales included growth in each of the company’s four categories: consumables, seasonal, apparel and home products, according to a Tuesday earnings release.

Vasos said during the call that the company also saw growth in customer penetration across all income cohorts, including low-, middle- and high-income segments, as an increasing share of consumers seek value.

“Notably, across these cohorts, the largest increase in customer count came from the highest-income segment, which earns more than $100,000 annually, contributing to a significant increase in trade-in customer households during the quarter,” Vasos said.

“We know that value and convenience are always important to our customers, but even more so right now,” Vasos added.

The Federal Reserve Bank of New York published research Wednesday (May 27) that said lower-income Americans are facing high levels of economic insecurity and financial strain.

“We find a remarkable increase in food insecurity, particularly among lower-educated and lower-income households and households with young children,” New York Fed researchers wrote.

The latest Consumer Price Index report from the Bureau of Labor Statistics, released May 12, showed inflation rising 3.8% year over year in April, while prices increased 0.6% month over month, marking the strongest monthly inflation gains since October 2022.