MMR: Mass Market Retailers, January 11, 2021

NEWS MERCHANT OF THE YEAR AWARD Dollar General Wins Accolade for Merchandising Adroitness From page 3 sumable and nonconsumable merchandising work to newer ventures including the strategic nonconsumables initiative NCI and pOpshelf Dollar General continues to take an intentional approach to its merchandising mix Dollar Generals consumables merchandising team continues to move ahead on a number of fronts including partnerships with supply chain and store operations on the DG Fresh initiative as well as on the companys cooler door expansion A strategic move toward the selfdistribution of perishable frozen and refrigerated goods for the past eight quarters DG Fresh has been the companys largest contributor to gross margin benefit It aims to reduce product costs by removing third party markups and increase the sales of those categories Dollar General plans to serve more than 14000 stores from 10 facilities by the end of the companys 2020 fiscal year It has been a very big change in terms of process says Emily Taylor who in September was named executive vice president and chief merchandising officer at Dollar General Taylor joined the retailer in 1998 and most recently served as senior vice president of channel innovation The cross functional teams that we have associated with DG Fresh continue to make tremendous progress Thats particularly relevant for Dollar General because we continue to grow the fresh side of our business adds Taylor The consumables team also continues to lean into the companys With stores averaging 7400 square feet of selling space assortment decisions are based on the chains keen understanding of its customers cooler expansion in existing and new stores with plans to add a total of 60000 this fiscal year The consumables teams work to lean into our DG Fresh initiative and our cooler expansion demonstrates their ongoing excellence and exceptional ability to support customers needs and the companys growth says Taylor Dollar Generals core nonconsumables merchant team in 2020 also made progress Through the third quarter the companys three nonconsumable categories delivered a combined comp sales increase well in excess of the consumable business Besides the continued enhancement of its core nonconsumable business Dollar General is also giving consumers additional reasons to shop through its non consumables initiative Launched in 2018 with the goal of improving Dollar Generals gross margins by offering expanded assortments in the key categories of home domestics housewares party and occasion NCI also involves changing the way products are displayed By the end of its 2020 fiscal year Dollar General plans to have NCI in 5600 stores and will also add a light version of the mix in about 400 stores We looked at those businesses NCI with our customers in mind to find opportunities to meet a broader set of their needs says Taylor The expanded merchandise including lamps throw pillows wall art gift wrapping party suppliers and other home items help create a treasure hunt experience for Dollar General shoppers The retailer has further enhanced that experience by displaying the products in a visually appealing way that is more conducive to browsing Our customers can really take their time and get inspired while they shop Taylor says Weve had great success in taking our shoppers mission which is often based on getting essentials and tying in opportunities for additional purchases that address both their wants and their needs The addition of exciting new products available in NCI stores was enabled by the reduction in space devoted to hanging apparel Taylor points out Balancing the offerings within a small box means making thoughtful choices on our customers needs While NCI stores have less hanging apparel weve also increased our more basic apparel offerings Taylor says This allows us to continue meeting our customers apparel needs but were able to do it in a different way that requires less space In all were able to meet the higher demand that existed in home categories compared to the fashion side of apparel In the fall of 2020 Dollar General revealed another demonstration of its ongoing consumer focus The retailer leveraged nearly two years of NCI lessons when it announced a new store format that could represent a new growth opportunity for the retailer The pOpshelf format debuted in the Nashville Tenn market The stores aims to engage customers with a merchandise mix that includes on trend seasonal items home decor health and beauty must haves home cleaning supplies party goods and entertaining needs all in a fun shopping environment with affordable products We are excited to introduce pOpshelf from a position of strength further highlighting our innovative spirit and building on our proven track record of store The team has pushed tirelessly for inventory to meet customer needs format innovation Dollar General chief executive officer Todd Vasos said when the concept made its debut We have leveraged robust consumer insights to create a unique store that we believe will resonate with new customers while providing Dollar General with even more opportunities for growth in the years ahead The next four pOpshelf stores are slated to open in and around the Atlanta Charlotte and Raleigh markets by early 2021 with plans to have approximately 30 locations in various markets by the end of fiscal year 2021 The formats initial target market is mainly digitally savvy suburban women with average household incomes of approximately 80000 Similar to the way we approach all projects at DG pOpshelf was based on a considerable amount of customer research which told us that there is some space in the discretionary side of our business Taylor explains Specifically what were delivering with pOpshelf is a continually refreshed merchandising assortment primarily in the nonconsumable categories at an extraordinary value merchandised in a fun and engaging store Regarding the value component pOpshelf aims to deliver Taylor noted that 95 of the products in the store are priced at 5 or less The pOpshelf format builds on a number of Dollar Generals traditional strengths including customer insights merchandising innovation and operational excellence Taylor says The two stores are fundamentally different from one another First and foremost pOpshelf is tailored for a different shopping occasion and is different in terms of real estate as these stores tend to be in more suburban locations Whats exciting to us is that it really is different in terms of a trip mission versus a Dollar General and its also quite different in terms of the types of markets where they will likely operate It is an incremental proposition to our portfolio that is a truly new and differentiated brand The pOpshelf format also offers a differentiated store experience Taylor says with impactful displays that help create a really fun easy and highly visual shopping experience in the store Whether through the consumable and non consumable business the expansion of the companys NCI initiative and creation of a new store brand Dollar Generals merchandising team continues to innovate and move ahead on a number of initiatives that help drive the company forward And beyond the strides made through Dollar Generals business in 2020 Taylor says she is most proud of the way her fellow merchants have demonstrated their commitment to the companys mission of Serving Others during a challenging year Our merchandising team really is world class and I feel very fortunate to work alongside this team every single day to help deliver what our customer needs and expects from us at Dollar General Taylor says This merchandising team has advocated and pushed tirelessly throughout this year to make sure were meeting our customers needs and to ensure our customers are able to save money by shopping at Dollar General Popshelfs displays create a fun highly visible shopping experience MMR January 11 2021 29