Dollar stores have been making headlines recently as cash-strapped consumers increasingly turn to them for essentials amid continually inflated prices.
Ahead of Groceryshop, Retail Brew had scheduled time to chat with Dollar General SVP and CMO Chad Fox, who was in attendance for a panel at the show. Initially, the plan was to discuss Dollar General’s marketing strategy and challenges Fox is facing as a retail marketer (which was still brought up, see below), but an in-depth Bloomberg story detailing a slew of allegations around employee safety and product quality issues was published the night before the interview and brought a different challenge to the forefront.
Before we share some of Fox’s broader marketing insights, we wanted to share his response to the recent headlines and how, in his role, he says he’s working to improve consumer sentiment around store safety and employee treatment.
“I’m going to leave that to our PR team and other people who deal with that on a daily basis,” Fox prefaced. (Dollar General’s PR team told Bloomberg it’s boosting labor to improve these conditions, among other efforts. It declined to comment further to Retail Brew.)
“From my perspective, we need to do a couple of things,” Fox told us. “I’m not going to say that we’re perfect, but the customer is at the center, and the customer does come first, and that’s why we do what we do. And so I think those things will continue to improve. I think a lot of retail is still recovering from the pandemic and supply-chain issues, and then it just worked its way down to where the stores are the tip of the whip. Our mission is to fill that gap and deliver for them.”
“And the same thing I would say for our employees,” Fox continued, noting the opportunities for its 180,000 workers to rise through the ranks at the corporation. “And for those of us who grew up in those communities, there’s not a lot of that.”
Retail Brew will continue to track the fallout from Bloomberg’s report and other issues Dollar General has been facing, and in the meantime, we’re taking a look at how the retailer is adjusting to broader marketing challenges.
Dollar earned: The marketing strategies and consumer behavior has evolved significantly since Fox joined the retailer from Walmart in 2019. Dollar General has increasingly targeted rural communities, with 80% of its ~19,000 stores (set to hit 20,000 like by early next year) located in towns with 20,000 or fewer residents, Fox said.
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According to Fox, this consumer base has been shifting from “immediate needs trips” to “routine-fulfilling trips,” and Dollar General has been establishing an identity as a “small-box discount retailer” in contrast to big-box retailer Walmart (where he worked in marketing for 13 years). Even as Dollar General increasingly becomes a “grocery alternative” for consumers, with food making up half of its sales, it’s still “misunderstood” as a store that sells “chintzy” products for a buck, Fox noted.
“That’s not who we are at all, and so driving that paradigm shift and telling that story of who we are and all the categories we’re in…I see that as the No. 1 job for me as a CMO,” he said.
Fox said when he arrived in 2019, the retailer largely relied on newspaper, direct mail, and signage for marketing, and has since transitioned to digital performance marketing. Its rural customer base is tougher to measure, Fox said, but it’s worked to build out its first-party data, optimizing based on in-store sales rather than cost-per-reach. This led to its digital media network’s revamp last year, when it in-sourced many of its operations, including data science, leading to an incremental return on ad spend for CPG advertising partners that is “huge compared to where we were” Fox said.
Looking ahead…As consumers continue to struggle with inflation and the return of student loan payments, Dollar General is courting two customer sets: existing customers and “trade-in” customers that it’s found are shopping at the retailer for the first time.
He’s focused on engaging these consumers digitally (which boosts their spend by 40%). It partnered with Ibotta in July to introduce DG Cash Back Rewards, which shoppers can access through its mobile app, while its new My DG loyalty program has been “a minimum viable product for a while,” he said, and the retailer is now working to roll it out to scale.
“It’s a sticky environment, I mean, [consumers are] more loyal, lifetime value is stronger. And so we want to inspire engagement, because we know that those customers are more productive, and we can generate more demand with every dollar that we spend to engage them,” Fox said. “Mission No. 1 is to go back to accelerating that natural phenomenon that is happening, where we are filling that unmet need of a fuller, full-in trip.”