iStock.com/jetcityimage
June 3, 2025
Will Dollar General Continue To Attract Higher-Income Customers?
While delivering an impressive earnings call on June 3, Dollar General CEO Todd Vasos also indicated that the low-cost retailer was outperforming in another interesting metric: its ability to attract new, higher-income customers to the brand.
Dollar General is experiencing “the highest percent of trade-in customers we’ve had in the last four years,” Vasos said in the earnings call.
“[Dollar General] is continuing to attract higher-income customers who are looking to maximize value while still shopping for items they want and need,” Vasos added.
The Q1 2025 earnings report for Dollar General saw the retailer exhibit same-store sales growth of 2.4% and an improvement of net sales totaling 5.3%, or $10.4 billion.
Furthermore, despite the continuing uncertainty related to President Donald Trump’s tariff policy, the retailer also raised its full-year guidance concerning net sales — instead of a previous growth range of between 3.4% and 4.4%, Dollar General now expects net sales to tick upward by between 3.7% and 4.7%.
Dollar General CEO Points to Low Prices as Vital to Value Proposition
The Dollar General CEO pointed toward the top-line successes that the company had enjoyed throughout its first quarter of 2025, signaling that the company’s firm commitment to value and a low-cost pricing structure had been a primary driver of that success.
“We continue to feel good about our everyday low price position relative to other competitors and classes of trade,” Vasos said.
“We continue to carry at least 2,000 SKUs at or below the increasingly rare $1 price point as we seek to help our customers stretch their dollars. We believe this value offering will become increasingly more important to customers in the months ahead,” he added.
On the other hand, Vasos also underscored the fact that recent data acquired by the company hinted at a cash-strapped core customer, even as new middle- and high-income shoppers have started opening their wallets at Dollar General stores.
“During our recent customer survey work, 25% of DG customers reported having less income than they did a year ago, and nearly 60% of our core customers noted that they felt the need to sacrifice on necessities in the coming year. While our core customer remains financially constrained, we have seen increased trade in activity from both middle and higher income customers,” Vasos said.
And while the CEO indicated that many of these incoming customers had been acquired organically, through refreshed store updates and a back-to-basics approach fixed on retail fundamentals common to successful dollar store operations, Dollar General’s new white-label same-day delivery service in partnership with DoorDash — along with its growing retail media network, DG Media Network — had attracted “a new and diverse customer base than what we normally have.”
“What we’re working on right now, as you would imagine from Dollar General, is: What does that future look like? And that is: How do we retain this trade-in consumer that we’ve been blessed with?” Vasos asked in conclusion.
Discussion Questions
Will Dollar General continue to attract higher-income customers over the course of the next few quarters? Why or why not? What headwinds might prevent this from occurring?
How important is maintaining a strong value proposition for Dollar General, in comparison to other elements such as store renovations, partnership with DoorDash, and DG Media Network?
Despite Dollar General’s historical customer base showing signs of reduced spend, will the influx of new customers with more discretionary spending capability be able to fully offset a weaker core customer base in the long run?
Poll
Loading …BrainTrust
Pamela Kaplan
Principal, PK Consulting
Richard J. George, Ph.D.
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
Scott Benedict
Founder & CEO, Benedict Enterprises LLC
Recent Discussions
More Discussions
Will an In-Store Retail Tech ‘Confidence Gap’ Create Winners and Losers?
A new survey suggests that in-store retail tech could be a major factor in retailer success…Walmart’s Next CEO Era: From McMillon to Furner
Walmart CEO Doug McMillon will soon be replaced by John Furner. What’s next for the retailer?Which Brands Are Missing the Boat on Advent Calendars?
Advent calendars appear to be trending upward in popularity, with potential to move to other holidays…
The big surge in higher income penetration came during the global financial crash. Dollar stores continue to make gains, especially during more economically difficult times, but the uplifts are shallower because the base is higher. I also think the longer-term trajectory is less favorable. A lot of higher income shoppers, especially in rural areas, use dollar stores because they are close and convenient. That advantage is becoming weaker as the likes of Amazon and Walmart expand their fast delivery into more rural areas.
Deep discounters like Dollar General are today’s five-and-dime stores, with eclectic assortments of sundry products and very modest esthetics.
When they are located in strip malls in the suburbs, they can siphon a few trips from well-heeled shoppers in between their big-ticket supercenter visits.
Stores in more rural locations may also snag some visits just because of the time-saving convenience versus a drive to the town center.
A few locations I’ve visited recently in southern and central Arizona looked kind of neglected, which might be a turn-off for shoppers who have a choice.
I think it all comes down to whether Dollar General continues to prioritize value, offering customers what they want and need at a good price. This is a very smart proposition for where we are in the economy today. However, to maintain this in the future I suppose this valued offering needs to remain convenient. If DG stays committed to this trade in customer, while not losing sight of their core, its possible.
I’ll confess to not understanding Dollar General. I’m an avid Dollar Tree customer, but DG’s prices just seem high to me. I guess I shouldn’t second-guess its success.
I think it’s more than customers acquired through refreshed stores and a back-to-basics approach, although that certainly helps.
It’s consumer created videos on social media that have opened up stores like Dollar General to a new customer base. People of all income levels like to buy cool stuff and save a buck at the same time.
I think the short answer is…”it depends”. Dollar General offers outstanding value on basic grocery and consumables items, pet food, OTC, and basic beauty products that all appeal to a wide demographic audience. Their locations also offer convenience based on the sheer number of locations and the ability to make a quick in & out pit stop for items that might take longer in a supercenter or traditional grocery store format. Their pricing is obviously better than any convenience operator.
All that said, they have more than a few operational challenges in terms of in-stock reliability, store cleanliness, and freight on the sales floor that block aisles and access to side counter shelves. A higher-income consumer will not tolerate that kind of shopping experience over time.
To their credit, Walmart has adapted their product assortment and shopping experience to embrace higher income consumers while not leaving their opening price point shopper behind. That’s a tough needle to thread, but they have done an exceptional job.
Dollar General plays a critical role in so many underserved communities this opportunity with higher income shoppers really sets them up for broader, sustained success. I hope they will take advantage of it.
With Walmart & others announcing expected tariff-related price increases, the opportunity for Dollar General market share growth should be expected. I am always reminded that “some people need to save money, while everyone loves to save money.”
How much higher is “higher income”?
Dollar General should be able to continue their run as long as they create and offer value. “Value” is in the eye of the beholder (shopper), of course. If they want to attract higher income households, Costco product values provide some good examples to follow, with often higher quality for a great deal. And Costco’s household income is likely upwards of $93,000, with as much as 36% exceeding $125,000. These customers aren’t looking necessarily for the lowest possible price, but a good quality-price ratio.