Dollar General buys Walmart stores to expand its retail base. The company has purchased 41 Walmart castoffs and plans by October to have replaced these with 40 Existing of its own stores plus create a new one. There have been no further comments by either company regarding this purchase. Tennessee firm Dollar General currently owns 12,483 locations throughout the USA.
Walmart originally intended to compete directly with Dollar Stores and similar companies involved in this budget retail market segment with its Walmart ‘Express’ stores. The first of these opened in 2011. In January 2016 it appeared to announce defeat in this project when it stated that it would close all its ‘Express’ stores – all 102 of them! This was apparently to focus more on its core supercenter business.
Dollar Stores has now purchased 41 of its so-called competitor’s stores, not to add the 41 to its 12,700 plus stores already in the US, but to use 40 in better and larger locations. Walmart Express stores are about 12,000 square feet against the average 9,100 square feet for Dollar Stores outlets. There will be one new store, but the other 40 will simply be expanded to include additional services such as fresh meat and other produce. These are currently available only in 145 Dollar General “Market” stores.
This is another step in the threat being faced by both small and large grocers and ‘big box’ stores from Dollar stores. It all started during the recession and has been increasing ever since people began to notice that they can pay less in such outlets than elsewhere for the same goods. Dollar are now beginning to sell more fruit and vegetables and other perishables that people purchase more often.
Dollar General intends to add gas fueling stations to 37 of the locations across 11 states in addition to expanded grocery and fresh meat counters. Dollar General stores are a definite threat to mainstream supermarts. Walmart tried to compete by opening up to 300 new small stores in 2014, 102 of them Walmart Express stores. This cost Walmart $600 million. The experiment failed, and the company ended the Express test. Walmart Express stores accounted for 102 of 154 store closures made by Walmart.
Dollar General shares have been increasing since November 2015, but have dropped off slightly over the past week. Walmart shares have also been increasing over the same period, at 56.4 on Nov 13 and 72.8 on July 29. Dollar General on same dates: 60.02 and 94.66.
Pvt. Ltd.
