In the latest edition of Omni Talk’s Retail Fast Five, sponsored by the A&M Consumer and Retail Group, Avalara, Mirakl, Ownit AI, and Ocampo Capital Chris Walton and Anne Mezzenga discuss:
Dollar General’s fresh produce rollout is slowing in 2025, with plans to add 300 new locations instead of the rapid pace seen in prior years. This week on Omni Talk Retail Fast Five, sponsored by the A&M Consumer and Retail Group, Ownit AI, Avalara, Mirakl, and Ocampo Capital, Chris Walton and Anne Mezzenga analyze what’s behind this decision, including the challenges of running grocery within a dollar store model and the financial dynamics of competing with Walmart in rural markets.
Key Moments:
[00:00] Dollar General’s fresh produce plans for 2025
[01:30] Why grocery is tougher than it looks
[03:00] Operational insights from Target’s fresh rollout expert
[04:15] Competing with Walmart in grocery
[05:45] Why this slowdown is actually a smart move
For the full episode head here: https://youtu.be/J8I1H1pFBT8
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Transcripts
Speaker A:
Dollar General is slowing down its fresh produce rollout.
Speaker A:
According to Grocery Dive.
Speaker A:
Dollar General's efforts to bring fresh produce, not produce produce to locations will continue into the new year, but at a slower pace compared to years prior.
Speaker A:
Dollar General's plan.
Speaker A:
more locations in:
Speaker A:
From:
Speaker A:
However, $ General still has ambitious store update plans in the new year.
Speaker A:
During the fiscal year:
Speaker A:
That sounds like an exact number.
Speaker B:
Very specific.
Speaker A:
Yeah.
Speaker A:
store openings in the US and:
Speaker A:
And is Dollar General's fresh rollout slowdown just an example of good capital allocation or do you think there's more going on here?
Speaker B:
I think it's a little bit of both, Chris.
Speaker B:
I think that, number one, this shows me that operating a grocery concept, especially one that includes fresh produce, isn't as easy as it might seem.
Speaker B:
And even though you have the best financial modelers at Dollar General, I think you still can't predict, you know, how consumers buy the cost of food, like inflation.
Speaker B:
Especially, you know, with Dollar General kind of bringing this, it's still relatively new to some of the Dollar General stores being able to purchase these things.
Speaker B:
So I actually think that, you know, they've already got a good pilot going with 5,000 stores and I think they're smart to kind of slow roll the rest of the rollout because they, they're still learning from it and they're still having to develop.
Speaker B:
And like I said at the beginning, like there's, it's still a very volatile and low margin industry grocery.
Speaker B:
So I think like, you have to be really able to flex and learn as you continue to expand, especially at the pace that they were going to do that.
Speaker B:
So I'd be doing the same thing if I was Dollar General.
Speaker B:
I'd be kind of phasing this out slowly.
Speaker B:
And the other thing I'd be watching too is, you know, as Walmart is still, still gaining share in grocery and that's a lot of the other retailers that's closest to people in these Dollar General geographies, like that's something their low, low pricing is something that you're going to have to contend with, too.
Speaker B:
So that's something else that kind of plays into this as a.
Speaker B:
As a tertiary factor.
Speaker B:
So I think it's.
Speaker B:
It's both like modeling the financial component of this and then figuring out operations of.
Speaker B:
Of running a grocery concept inside of a dollar store.
Speaker B:
But where do you.
Speaker B:
What do you think about this?
Speaker B:
I mean, is this.
Speaker B:
Do you think it's.
Speaker B:
It can be modeled correctly?
Speaker B:
Like, where.
Speaker A:
What do you think?
Speaker A:
Yeah.
Speaker A:
Yeah.
Speaker A:
No.
Speaker A:
Yeah.
Speaker A:
In reality, the question I ask you is kind of silly, you know, because in reality, like, if you're gonna.
Speaker A:
If you're gonna reallocate your capital, it's probably both.
Speaker A:
Right.
Speaker A:
It's probably.
Speaker A:
It's clearly not doing or not producing the ROI that they initially thought it was.
Speaker A:
And so especially compared to the standard remodels.
Speaker A:
So they're reinvesting their capital.
Speaker A:
They're smart and, you know, and I think.
Speaker B:
And is that common, Chris?
Speaker B:
Like, you worked on Fresh, like putting Target Fresh together.
Speaker B:
Like, where does.
Speaker B:
How does that.
Speaker A:
It's actually.
Speaker A:
It's actually not that common, I would say, because retailers double down on things they've said, so actually give a lot of kudos to them for saying, okay, you know, we're still going to do it.
Speaker A:
We're going to slow it down.
Speaker A:
We're going to do it in the stores.
Speaker A:
We think, you know, we're still going to do 300 stores.
Speaker A:
We're going to do it in the stores where I think it's going to have the biggest impact.
Speaker A:
The other thing I'll say, because I think we talked about this when they first announced the strategy.
Speaker A:
Zach Brining is there.
Speaker A:
He's former army star Zach Brining.
Speaker A:
He was actually in charge of Targets Fresh rollout.
Speaker A:
So.
Speaker A:
So they have people inside Dollar General that know how to do this as well as anyone out there.
Speaker A:
So I just think.
Speaker A:
I just think Net Net.
Speaker A:
To me, it actually feels like a smart move on paper.
Speaker A:
And I don't think I'd read anything more into it than that, honestly.
