Dollar General wants to go upmarket with Popshelf. So far, it’s working.

Dollar General’s new store, Popshelf, offers items for $5 or less, and has been wildly successful so far, which could lead to massive expansion.

While other retailers were shuttering during the pandemic, Dollar General bucked the trend by launching an entirely new store format.

Popshelf is targeted toward suburban women with household income between $50k and $125k and primarily offers items for $5 or less across a range of categories, including:

  • Seasonal and home decor
  • Health and beauty
  • Cleaning supplies
  • Party goods

The concept has been likened to Five Below for adults…

… and so far, results are promising. Dollar General opened 8 Popshelf stores between October 2020 and May 2021, with impressive metrics across the board:

  • Annualized sales ranged from $1.7m to $2m per store, compared with $1.4m for first-year sales at a standard Dollar General
  • Gross margin is ~40%, 8 points higher than a traditional Dollar General
  • Promoter scores have climbed into the 80%-90% range, a rarity in retail

This early success has led to aggressive growth plans

The top brass at Dollar General sees an opportunity to open 3k Popshelf stores nationwide, but one challenge may lie in the store format.

Executives have hinted that some Popshelf locations may be opened as a “shop-in-shop” within traditional Dollar General stores, which some analysts believe could tarnish the Popshelf brand.

To learn more about the economics of Dollar General and its competitors, check out our visual explainer.

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