Dollar General works to inject some new life

GOODLETTSVILLE, TENN. — Dollar General has recently implemented several supply chain initiatives to enhance its business, ranging from back-end production to international sourcing efforts.

The main priority for the chain this year is to address store operations across the company's entire network, said David Perdue, chairman and CEO, during the during a Credit Suisse First Boston retail conference last week

As part of this effort, Dollar General recently hired outside consultants to evaluate its store operations, with an emphasis on researching the flow of merchandise in the stores.

The first phase of this project is slated to be completed by the end of the first half of this year.

"At that time, we will evaluate the recommendations and begin implementation of results throughout the chain," Perdue said.

The company is also building up its management team, having recently added two new merchandising vice presidents to support the consumables, home and apparel areas. (see Page 15.)

In merchandising, Dollar General is focusing now more than it has ever done in the past on opportunistic buys — "treasure hunt items," Perdue said.

Finding it has opportunity to increase its sales per square foot of its larger stores, Dollar General is currently testing "new ideas and new models for these formats," Perdue said.

While the chain's real estate centers on urban areas where its core demographic of low- to middle-income customers shops, Dollar General is experimenting with new locations and segmentation strategies that serve regional needs and new demographics, such as the store's fastest growing group — families with annual incomes of greater than $50,000 — as well as more ethnic consumers, particularly Hispanics and African Americans..

"We're trying to segment some stores right now," Perdue said. "We have beach stores, for example, and we're looking at other segmentation strategies, in terms of how to merchandise those stores as well as how to locate those stores."

Expanding international sourcing efforts is another major focus for Dollar General this year. It already owns and operates an office in Hong Kong, "and we plan to increase our levels of penetration in this effort," Perdue said.

To support this effort, the company is improving its distribution center operations with several new endeavors: At four of the existing seven sites, the company has added a third work shift; it is expanding two of the seven sites to convert them to dual sortation, which is expected to increase capacity 60 to 75 percent; and earlier this month Dollar General broke ground on a distribution center in Union County, S.C., which is scheduled to open by mid to late 2005.