Dollar General’s CEO flags a worrying trend in customer behavior as the company reports a decline in store traffic despite an increase in sales. The retailer saw same-store sales rise by 1.2% year-over-year during the holiday season, but customer visits to its stores dropped by about 1%. Operating profit shrunk by roughly 49%, citing store closures.
CEO Todd Vasos attributes this shift to worsening financial conditions among customers, mainly due to inflation’s ongoing impact. Customers are now forced to prioritize basic essentials over discretionary spending. The company’s focus on essential items priced between $1 and a little over $10 makes this trend particularly surprising.
Tariffs, imposed by President Trump, also pose a challenge for Dollar General, with potential price hikes affecting several products. Despite this, the CEO believes the company is well-positioned to mitigate these impacts. Vasos notes that the macroeconomic environment is unlikely to improve significantly in 2025, making it essential for customers to value convenience and affordability.
To address these challenges, Dollar General plans to expand its delivery service to thousands of stores and close underperforming locations. The company aims to make delivery a competitive advantage, catering to small-town rural America’s needs. Additionally, the “Back to Basics” initiative focuses on reducing retail theft, improving supply chain management, and offering more promotions in-store.
Shares were off about 1% on Friday at $79.02, up 4.2% this year despite market turmoil.
Source: https://www.thestreet.com/retail/dollar-general-ceo-flags-alarming-shift-in-customer-behavior