Photo: Dollar General
Is Beauty A Natural Extension For Dollar General?
Dollar General is rolling out enhanced in-store layouts and broader offerings in the beauty category in approximately 300 stores as part of an initiative dubbed “Beauty Reinvention.”
Beyond employing “simpler, easy to navigate” beauty and personal care aisles, the sections feature beauty bars to give customers a “treasure hunt” experience with face masks, hair treatments, nail polish, lip gloss and bath bombs, according to a press release. Other format enhancements include increasing the skincare section by 50 percent, soap and shower offerings by 30 percent, and an expanded hair care and color section with new textured hair products.
Over 1,000 beauty, skin and hair care offerings will be added to the beauty-focused layouts, along with three exclusive lines – Joy Works skincare, Curl Rhythm and yes! Honey hair care – which are rolling out nationwide to the chain’s more than 19,000 doors. Dollar General’s Believe Beauty Skin, which debuted in 2021, has added three new products including a detoxifying clay mask, reviving eye cream and a vitamin C brightening serum.
Amanda Wilson, senior beauty buyer at Dollar General, said in a statement that the expansion was based on customer feedback. “We have been purposeful in our expansion, balancing new, fresh and trendy items with value,” she said.
The beauty push comes as Dollar General has been upgrading broad assortments, including expanding space and offerings supporting healthcare products as part of the DG Wellbeing initiative. Investments in coolers have expanded frozen and refrigerated offerings across stores as part of the DG Fresh self-distribution initiative. Produce is set to reach more than 5,000 stores by the end of 2023.
Jeff Owen, Dollar General CEO, said on the company’s fourth-quarter analyst call that private brands have grown to represent more than 20 percent of sales with continued investments in candy and snacks, perishables, pet food, and over-the-counter healthcare products. “We believe these products will further differentiate Dollar General in the marketplace as we look to provide our customers with tremendous value on quality products,” he said.
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Discussion Questions
DISCUSSION QUESTIONS: Does amplifying the beauty category make strategic sense for Dollar General? What role will the chain’s private brands play in its success in beauty and other product categories?
Poll
Loading …BrainTrust
Dion Kenney
COO, Mondofora
Cathy Hotka
Principal, Cathy Hotka & Associates
Yes, strong move by Dollar General. Given the massive footprint Dollar General has and a consumer base that skews female, the addition of beauty is a natural. And just like so many other retailers have discovered, private brands can be a boon — exclusivity and higher margins, what’s not to love?
I wouldn’t have guessed they would try it, but I think adding a beauty category is a clever idea. In challenging economies, inexpensive beauty products provide an affordable indulgence and could attract female shoppers to explore other cost-effective purchases while there.
When I think of beauty, I think of clean, well-lit stores. Have you been to a Dollar General? Those stores are anything but — they’re dirty, with aisles of chips in boxes. While it may make sense to expand into beauty, more SKUs will only add to the confusion.
Yes, yes, yes. Adding a little affordable luxury to the bargain finds at DG is a great idea. This should be a strong category.
From where I sit, this is a much anticipated extension into beauty. And it is something that will delight their shopper base and create a new dynamic across the category.
Dollar General will need to move toward a more inspired merchandising approach and put an intentional spotlight on this section of their operation. (Speaking from experience, that’s something we have been involved with for many years across other retailers and not an area where DG has traditionally focused.)
Focusing on beauty will attract more shoppers who seek affordable everyday essentials.
Private brands differentiate Dollar General with affordability, variety and exclusivity that deepen loyalty.
Beauty is one of the fastest growing areas of retail so everyone wants in on it! Dollar General has already made progress in the category with its own brand, which it developed and enhanced a number of years ago. Expanding the assortment makes sense and should boost sales, especially among some of the middle income shoppers that are now using Dollar General more. The one thing they will need to manage, at least at the present time, is the reluctance among harder-pressed consumers to add discretionary things to their basket while shopping.
This aligns 100 percent with Dollar General’s value proposition. Affordable access to beauty products, especially in rural markets where it’s difficult to find these items, is a win-win–for Dollar General and for their customers.
I think this could impact TJX and they can steal share adding topline revenue.
Of course, it makes sense. And promoting private labels even makes more sense. While beauty is a very branded category for the customer, the price has always trumped brand at the dollar stores, as it will in this initiative.
With Bob Phibbs’ caveat about clean, well-lit stores in mind, I do think this is a win for Dollar General given the frequency of its’ customers’ visits and the margin opportunity that beauty represents. Will DG compete on a level playing field with Ulta at Target or Walgreens’ beauty department? Probably not, but sticking a toe into the water is definitely worth the effort.
Yes, this completely makes sense for Dollar General. I just think they have to be thoughtful about the trip type–is their shopper otherwise buying at Walmart? They can’t have the breadth of assortment Walmart has so that thoughtfulness is key.
As for the private brands, again, they have to figure out where they can win. I wouldn’t take the value channel shopper for granted, strong brands and the equity they carry don’t always lose out to value. They’ll have to ensure that the private label quality exists and continue to drive that equity in the right assortment. Lots of tests, trials and gaining feedback will be important for them.
Acknowledging the diversity of their shopper, considering their store clusters and catering to those differences must also be considered.
They are a very smart retailer, they’ll figure out what works quickly enough.
Dollar General’s core customer will love this upgrade. Beauty product expansion and new private label brands will give DG an edge in a new category.
Dollar General’s operating model is built on price, so anything that can logically be fitted under the price point(s) – I wouldn’t expect furniture…or cars – “makes sense”.
That having been said, if it hasn’t already, DG, and other “dollar stores”, will run into problems with a rigid price model (the same one that caused “5 and 10 cent” stores to become “5,10 and 25 cent stores”): everything under a dollar becomes many things under a dollar, then just “inexpensive”; and it becomes increasingly difficult to define what the store represents.
In my opinion, there is always a risk involved when a company tries to grow into an area that is completely different from its core business. Dollar General is a well-known brand that primarily offers utilitarian products, whereas beauty products are more personal and diverse, catering to the individual tastes and preferences of customers.
So, at this stage, I believe it would be wise for Dollar General to start modestly and gain enough customer trust before making a significant investment in their beauty product line.