Dollar General makes key move Target, Walmart can’t beat 

Presence is everything. Just as it does in personal relationships, presence plays a major role in business. Especially for retailers. 

When I am in a hurry, or I’m missing a few dinner ingredients or household cleaning products, I will not drive miles away to a megastore, but will drop by the nearest store and get what I need as quickly as possible. That’s why location has always been an important factor for retail stores. 

Dollar General is recognized as a neighborhood retailer, meaning its stores are often located in smaller towns and rural communities. It operates in a smaller format than Walmart and Target; however, the three retailers share other characteristics.

All of them implement the “one-stop stop” model of offering both general merchandise and consumables. All three invest heavily in private labels that mimic national brands but are more budget-friendly. They also all offer popular, more expensive brands.

Now, Dollar General is making a major move, capitalizing on one of its important advantages: presence. 

Dollar General expands same-day rural delivery service 

Dollar General revealed on January 22 that it is expanding the reach of its same-day delivery offering through the DG app and website.  

Using its strategic positioning across the United States, the discount retailer is making its myDG Delivery available across more than 17,000 stores. 

“myDG Delivery is helping bridge the digital gap by extending same‑day delivery to rural communities nationwide,” stated Dollar General Vice President of Digital Commerce Lydia Thacher.

“We are proud to offer a service that not only brings convenience to our existing customers, but also introduces new customers to the Dollar General brand through a frictionless digital experience.” 

Dollar General is boosting its reach through two key partnerships: a long-standing tie-up with DoorDash covering 18,000 stores and a fresh collaboration with Uber Eats at over 17,000 locations. 

Dollar General’s delivery in rural areas: highlights 

• Massive reach: The service is now available at more than 17,000 stores.
• Targeting rural America: The main goal is to bring modern convenience to underserved communities. 
• The “five-mile” advantage: Dollar General’s biggest strength is its physical locations, since 75% of Americans live within five miles of a Dollar General store.
• Digital growth: This move is part of a plan to grow the company’s digital presence, as it already has 7 million monthly active users on its app.
  Source: Dollar General 

Smaller stores’ advantage over big-box retailers 

Even though Walmart and Target are huge retailers, their large-scale operation can limit them in some ways. Dollar General’s advantage over Walmart and Target lies exactly in the small format of its stores. 

Because the discount retailer’s stores are tiny compared to the competition (about one-tenth the size of a Walmart store), they are more affordable to build. They are also cheaper to run, as they require fewer employees. In addition, smaller stores don’t try to sell everything, but instead carry the basics, simplifying inventory management. 

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In contrast, Walmart and Target formats “depend on dense populations to support construction costs, labor requirements, and high-volume inventory turns. As a result, many small towns, particularly those with fewer than 1,000 residents within a three-mile radius, are economically unviable for large-format retailers,” according to Matthews. 

This means that in towns with smaller populations, it’s not feasible for Walmart to make a profit, and that’s exactly where Dollar General is poised to dominate. 

WhyTarget, Walmart can’t match Dollar General’s efficiency 

When it comes to delivery, physical presence is of the utmost importance. In fact, the “last mile” delivery or final phase of the delivery process is the most expensive and time-consuming, but key to customer satisfaction, writes eMarketer.

In fact, “last-mile delivery can cost more than a shipment that makes its way through a typical fulfillment center,” reads the eMarketer’s report. 

The locations of Dollar General stores basically cover that “last mile” (i.e., 75% of the U.S. population lives within five miles of one). This means the retailer doesn’t need to ship products long distances from city warehouses to local stores, which reduces logistics costs and increases efficiency.

And while Walmart and Target are investing in drone delivery and automated warehouses to increase speed, they can’t match Dollar General’s neighborhood presence. 

Related: Discount retail chain suddenly closes multiple locations