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March 14, 2025
Dollar General To Trim pOpshelf Store Count: Can the Banner Prosper Despite Challenges From Temu and Others?
Dollar General is poised to shutter 96 namesake stores and 46 of its pOpshelf banner locations, according to a March 13 press release. The news comes as part of a broader mixed earnings report, which saw the discount retailer produce net sales that outpaced expectations, yet store closures as the result of a store portfolio review heavily dragged on earnings.
Net sales for Q4 2024 rose by 4.5%, as Chain Store Age indicated, reaching $10.3 billion. That figure slightly bested analyst expectations of $10.26 billion and was also above the year-prior sum of $9.9 billion. According to Dollar General, that growth was largely achieved through strong same-store sales as well as sales from new stores, and it was offset by a number of store closures.
On the other hand, operating profit tumbled by a significant 49.2% to $294.2 million, which Dollar General largely attributed to charges of $232 million connected to its store portfolio review as well as to store closures and pOpshelf impairment charges.
Despite this, the company’s CEO was in positive spirits.
“We were pleased with the underlying performance of the business in the fourth quarter, including improved execution and solid top-line results,” said Dollar General CEO Todd Vasos.
“As we reflect on our full fiscal 2024 year, we believe our Back to Basics work is resonating with customers, as demonstrated by higher customer satisfaction scores and healthy market share gains,” he added.
pOpshelf To Operate 180 Stores After Closures and Conversions, but Can It Hold Fast Against Temu and Other Low-Cost Retailers?
After closing 46 pOpshelf locations and converting six more over to the namesake Dollar General brand, there will be 180 locations left in total. The pOpshelf banner was first launched in 2020 and seeks to appeal to upscale bargain hunters.
“As we enter 2025, we are optimistic about the pOpshelf banner and our opportunity to drive improvements in our sales results as customer feedback on the brand and shopping experience continue to be strong,” Vasos said on an earnings call, per Chain Store Age. “Going forward, we plan to build on the strength to increase sales through a variety of initiatives centered around new brand partnerships, enhanced in-store experience, new and expanded categories, and a new loyalty and digital experience.”
The question arises of whether pOpshelf can maintain the promise of “a fun, affordable and differentiated treasure hunt experience, delivered through continually refreshed merchandise, a unique in-store experience and exceptional value,” as then-COO Jeff Owen claimed during a 2021 conference call.
With Dollar General set to reduce its total number of pOpshelf locations by about 22%, per Retail Dive, the banner’s differentiation and overall value proposition may have faced headwinds in the intervening years, particularly from increased competition.
Temu (holding a 17% market share in the discount store category in the U.S., per Backlinko) is just one name to enter the conversation, alongside the recent entry of Amazon Haul into the space. Neither of the aforementioned entities was a significant force at the time of pOpshelf’s initial rollout, with Temu hitting the stateside scene in late 2022.
Is pOpshelf (and by extension, Dollar General) positioned properly after a comprehensive portfolio review to take on challenges posed by a glut of competitors fighting for the same consumer dollar?
Discussion Questions
Will pOpshelf’s repositioning within the discount retail market allow it to readily capture more market share against larger players? Why or why not?
What are the missing pieces, if any, standing in the way of pOpshelf’s plans to offer differentiation in the low-cost “treasure hunt” retail space? What are other competitors doing better?
Poll
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Carol Spieckerman
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Popshelf isn’t a bad concept per se. It was originally developed to grab some of the market that Five Below was succeeding in, and to give Dollar General a vehicle to boost its business in the discretionary side of retail. The stores I have visited are reasonably nice, though the offer wasn’t quite as exciting as Five Below. The big problem is timing. Since launching, two very unfavorable dynamics have come into play. First, shoppers have cut back on discretionary products. Second, the Chinese fast marketplaces have become more significant. Popshelf is not strong enough to thrive against these two factors.
After a bit of searching I finally came upon a description of what pOpshelf is (launched in 2020 and seeks to appeal to upscale bargain hunters); still vague in my mind is exactly how it’s being repositioned; but maybe that doesn’t matter much: it’s a very minor part of DG’s store count, and as is frequently the case with red-headed- stepchildren in the corporate fold it’s likely to struggle. Closing a quarter of the stores validates that lack of enthusiasm at HQ…cheery statements notwithstanding.
A 96-store pruning is a drop in the bucket for Dollar General. Dollar General pioneered the small format, skeleton crew general store and has made big bets on supply chain overhauls and category leaps to maintain relevance. Popshelf stores are cute and fun and cheap enough but is that a winning formula against the juggernaut that is Temu? As the competition heats up and consumer confidence wanes, Popshelf feels like a well-intentioned distraction for Dollar General.
One potential strategy for pOpshelf could be to focus on enhancing the in-store experience by offering unique, curated products that are not easily found online.
Additionally, pOpshelf could strengthen its customer loyalty programs to build a more dedicated customer base.
Collaborating with local artisans or small businesses to offer exclusive items could also help differentiate the brand from competitors like Temu. I should also note that not everybody is in love with Temu.
There is a relatively new pOpshelf store a few doors down from a Five Below in our local town center. Aside from store decor the two stores are almost interchangeable. Making pOpshelf stand out is going to take some work in both marketing and product selection.