Dollar General launching $5 store chain

Unlike many retailers, Dollar General has proved largely immune to the coronavirus' devastating impact on brick-and-mortar stores. Now the discount chain is shrugging off the pandemic to launch a new line of stores geared to less budget-mind shoppers.

The Tennessee company said Thursday that it will debut the new store concept, called Popshelf, with two locations opening near Nashville on October 29. It plans to have about 30 locations in various markets by the end of 2021.

Unlike Dollar General, which mostly sells necessities including food, snacks and cleaning supplies, Popshelf will sell beauty products, home decor, party supplies and other discretionary items. Still, the emphasis will remain on affordability — most products will sell for $5 or less.

The new chain's target audience will initially skew female, with the outlets located in suburban markets with household incomes ranging from $50,000 to $125,000. The modest-sized stores, which will run roughly 9,000 square feet, will have roughly 15 employees.

As with rival Dollar Store, publicly Dollar General mainly caters to shoppers on a tight budget, with many of its 16,720 stores in 46 states located in rural areas whose populations are too small attract larger retailers like Walmart and Target. 

That formula has proved remarkably successful, with Dollar General defying the surge in ecommerce that has crippled dozens of major retailers. Over the last decade Dollar General's revenues have nearly tripled to $31.3 billion, up 17% from the previous year. It's also uncommonly profitable in the cut-throat retail industry, generating $2.3 billion in its last fiscal year. 

That growth has only continued during the health crisis, with the company reporting same-store sales climbed nearly 19% in its most recent quarter.

Dollar General's no-frills approach, which emphasizes keeping labor costs low, has proved a hit with investors. Since 2015 the company's stock has soared more than 220% to $219.24. That has eclipsed even powerhouse Walmart, whose shares are up 110% over the same period.