According to Dollar General CEO Todd Vasos, the banner’s “core consumer is in pretty good shape. She is working. She has money in her pocket,” but she also “is always stretched,” which is shaping the retailer’s business strategy.
Vasos explained at Barclays Consumer Staples Conference last week that while pandemic-related stimulus from the federal government “was a nice tailwind for our core consumer and really those consumers above even our core consumer … we want to be somewhat cautious because stimulus money is starting to wane, obviously, almost completely out of the system.”
Yes, new child tax credits and higher Supplemental Nutrition Assistance Program benefits will take effect in the fall and later this year – offering additional financial relief for many Dollar General consumers – but, Vasos said, that “extra money, if you will, is probably going to be offsetting … the stuff that falls off.”
The result is Dollar General’s core consumers will continue to have money to spend and overall be in “good shape,” but they will not have extravagant amounts of discretionary spending and so price and value will remain key attributes influencing their shopping decisions.
With this in mind, Vasos said Dollar General will prioritize offering value, even with inflation “starting to creep in.”
This means store buyers likely will “trade off products for our consumers. Where [brands] may be coming to us with price increases, we’ll drop items and we’ll add new items, just to make sure that we can keep the value withing the box for that consumer,” Vasos said.