Dollar General Has a Bold Plan to Take on CVS, Walgreens

The discount retailer has one massive advantage as it moves into a crowded space.

Dollar General (DG) – Get Dollar General Corporation Report rarely gets mentioned as one of America’s biggest and most successful retailers. That might be because the chain serves the parts of the United States ignored by most retailers. It also has an audience that’s less affluent than the customers Target and even Walmart go after.

What many may not know is that for many of its customers Dollar General offers a lifeline. The chain generally serves an audience that lives within one mile of its stores and many of its customers have no other easy option when it comes to food and household basics.

That’s a responsibility Dollar General management has leaned into in recent years. The chain has expanded its food offerings and even added fresh produce, meat, and eggs to over 10,000 of its stores.

“Food insecurity impacts communities across the country, and given that Feeding America projects that 42 million people may face hunger as a result of the pandemic, we want to be part of the solution for those facing this issue,” then Dollar General CEO Todd Vasos said in July 2021. “With our extensive store footprint, often in communities others have chosen not to serve, Dollar General is uniquely positioned to help combat hunger by offering convenient access to a variety of nutritious foods at affordable prices.”

Basically, the retailer has embraced serving its audience in the best ways it possibly can. Now, it has a bold plan to expand its offering in a way that will further serve its huge audience.

Dollar General Wants to Move Into Healthcare 

Dollar General has over 18,000 stores. That’s a stunning footprint that has largely been built around serving underserved markets. The chain, it should be noted, isn’t a dollar store. It’s a discount retailer that sells a broad mix of everything from fresh and frozen food to household goods, basic electronics (like phone chargers), and a mish-mosh of other items.

Now, the chain has a bold new plan to move into healthcare. That’s a direct threat to CVS (CVS) – Get CVS Health Corporation Report and Walgreens (WBA) – Get Walgreens Boots Alliance Inc. Report, which dominate that space across the country. Jeff Owen, who just took over from Vasos as CEO, spoke about those plans during the chain’s second-quarter earnings call.

“Turning now to an update on our health initiative, branded as DG Wellbeing. The initial focus of this project is an expanded health offering, which consists of approximately 30% more feet of selling space and up to 400 additional items as compared to our standard offering,” he said. 

Dollar General has been slowly growing these efforts.

“This offering was available in approximately 2,700 stores at the end of Q2, and we are on track to expand to a total of more than 4,000 stores by the end of 2022,” Owen added.

What Will Dollar General’s Health Offering Look Like

Dollar General does not have the healthcare history of CVS or Walgreens so it’s asking for help in deciding what it should offer as part of DG Wellbeing.

“During the quarter, we announced the establishment of a new Healthcare Advisory Panel, which recently convened its first quarterly meeting,” Owen shared.

The panel, he added “is composed of highly regarded healthcare industry subject matter experts who will serve as thought partners to our team, including advising on how best to invest resources to better serve our customers in the health and wellness space.”

Dollar General has very broad plans in the healthcare space.

“Looking ahead, our plans include further expansion of our health offering, with the goal of increasing access to basic healthcare products and ultimately services over time, particularly in rural America,” the CEO added.

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