The chain began offering the products after getting feedback from shoppers who could not find affordable food with low sodium, calorie, fat and sugar levels or without artificial sweeteners, said Dollar General’s Chief Merchandising Officer Jason Reiser.
“These types of healthy food options seemed out of reach,” Reiser said.
“Our core customer is always a little bit behind the curve,” Dollar General CEO Todd Vasos said at a conference earlier this year. “Better-for-you is starting to emerge as a trend.”
Cheap groceries strategy
Dollar General’s slow push into healthier snacks is part of its larger strategy to sell groceries and fresh food.
The company said Tuesday that offering fruit and vegetables at stores in rural and urban food deserts can “drive a tremendous amount of traffic.” By the end of the year, around 450 stores will have produce sections and refrigerators. 200 more stores will get them next year.
Low-margin consumable goods make up 75% of Dollar General sales, and the company has been focusing on its more profitable house brands, such as Good & Smart.
“Our goal is to build Good & Smart into a unique private brand that becomes a go-to product line for customers,” Reiser said.
Racine also attributes Dollar General’s pivot to the chain’s role in servicing low-income populations. A growing number of customers spend food stamps at Dollar General, and the government has hinted that it could one day require Supplemental Nutrition Assistance Program recipients to buy healthier food. The government could also make stores selling to SNAP recipients add healthier options.
The growing competition over selling better-for-you food to low-income shoppers mirrors the fight that has taken place for years at Whole Foods and Sprouts at the premium end of the grocery market.
“Convenience and dollar stores are often the last to adopt,” Lang said.
Dollar General will face challenges selling fresh food, she added. The chain has what it describes as a “simple business model,” and it keeps costs low by employing just a handful of workers at stores to stock the aisles.
But offering produce and meat is expensive. Dollar General sells largely shelf-stable food, and it has to build out supply chain and train store workers how to handle and monitor the fresh food. All of that investment could weigh on the chain’s profitability.
Correction: A previous version of this story incorrectly said that Dollar General will sell meat at 450 stores by the end of the year. It will only sell fruit and vegetables.