Dollar General Waltzes Bobbie Brooks Into Walmart Territory

Dollar stores are unlikely fashionista destinations, but Dollar General (DG) wants to change that idea. Can its down-home style re-occupy the retail space that Walmart (WMT) and other ex-discounters are abandoning?

Dollar General is getting set to launch the Bobbie Brooks line of apparel in two collections later this year--one for women; the other for girls. To hype the launch, the retailer is holding a model search among its employees. The association of Bobbie Brooks with Walmart is germane because Dollar General has aspirations to become more like what Walmart used to be. The company, which has almost 9,000 stores in 35 states, has even been teasing Walmart a bit lately. Dollar General issued an announcement about adding 5,000 jobs shortly after Walmart announced that it was laying off about 11,000 employees.

Like Dollar General, Bobbie Brooks has a folksy image. John Mellencamp immortalized it in his classic ode to love in the country, Jack and Diane, specifically in the lyrics: "Jackie say, 'Hey Diane let's run off behind a shady tree/Dribble off those Bobbie Brooks/Let me do what I please.'" For a while, the apparel was even part of the Walmart (WMT) label stable.

Dollar General is stirring up some publicity with Bobbie Brooks and other initiatives for a reason. It wants consumers to see it as more than what the first half of its name suggests--a store with a lot of merchandise that retails for under $1.

In the last annual report it filed, for 2008, Dollar General identified itself as a discount retailer, but it hasn't felt compelled to hold the line at a dollar â€" not even fudging the figure the way 99 Cents Only has -- or even at $10, a figure that once was more or less a price limit. Today, it simply says that "a majority" of its products are priced at $10 or less and "approximately" 25 percent at $1 or less.

Current management, now that the company is publicly owned again after a period when it was in the KKR stable, wants to create a discount-store model that works. With moves such as the addition of Bobbie Brooks and placing more emphasis on its DG private label for goods like diapers and paper products, Dollar General is establishing itself as a retail brand that provides everyday needs at bargain prices.

It looks like a wise transition because traditional discount stores are changing. Walmart is primarily a super-center operator these days, with an increasing emphasis on food. It continues to replace discount stores with super-centers and to expand on store concepts such as its Neighborhood Markets groceries and its Latin-oriented warehouse, Mas Club. At the same time, it is also trying to establish itself as a destination for major purchases, whether of the week's groceries or of pricey electronics. In taking that position, Walmart begins to have as much in common with warehouse clubs as discount stores.

Target, of course, has taken several steps away from the traditional discount store model by introducing designer name apparel and accessories. With the expansion of its P-Fresh format, Target is also pushing food and converting its discount stores into mini-supercenters. And while Kmart is staying closer to the traditional discount store model, it has closed a large number of stores and no longer operates in many communities. Dollar General, in short, sees an opportunity.

The Bobbie Brooks launch -- really a relaunch of a proprietary brand that Dollar General has contracted to offer exclusively since 2005 â€"- and the corresponding roll-out of Open Trails apparel for men and boys, allows the retailer to press the point that it is preserving the traditional discount store and its place in the market.

The launch could also reinvigorate the Dollar General apparel program. In the most quarter, Dollar General reported that apparel sales gained about three percent to $213 million, compared to 13 percent sales growth overall. As Bobbie Brooks gets a new face from among Dollar General's employees and sweeps into stores this spring, the retailer should see a boost in sales. It also will get a chance to promote itself as the general store for the modern era--exactly what a discount store should be.