Recipe Cards Dollar General

The discount chain reported its fourth-quarter earnings early Thursday. Same-store sales were up 5.7% during the quarter, largely thanks to growth in its consumables category, the company said.

Revenue for consumables – which includes food items, health and beauty products, and snacks, among other things –increased by 22.7% during Q4, while sales of non-consumable products such as homeware and seasonable items were up by a more muted 3.1% and 5.7%. Apparel sales declined by 7.3%. 

In January, the retailer signed a partnership with Ibotta, a financial services company. Ibotta will provide cash-back rewards on certain items that customers purchase through Dollar General starting this spring. 

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But it isn't the first time that the company has pushed into financial services. From money transfers to accounts connected to debit cards, the retailer has been adding these offerings for years. 

Those services are a small part of Dollar General's business today. Customers want and need financial services like the ones Dollar General is offering, CEO Jeff Owen said on a May earnings call.

Here's a list of all Dollar General's financial services. A Dollar General spokesperson confirmed that the list is current, but declined to offer additional comment. 

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Launched last March, Spendwell allows Dollar General customers to sign up for a bank account and Visa debit card at one of the chain's 19, 000 stores. Dollar General partnered with InComm Payments and Iowa-based MetaBank to offer the accounts and cards.

Customers need to spend at least $1 at a Dollar General to open an account. Once activated, the debit card can be used anywhere that accepts Visa. Users also get other benefits: They can add cash to their account at Dollar General stores, pay bills through their online account, and get access to their paycheck a couple of days early if they set up direct deposit.

When they pay for their purchases at a register, Dollar General customers have the option to redeem debit and credit card rewards points for money off what they're buying.

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That's a perk that the chain started offering last year through a partnership with FIS Premium Payback. The pilot allows customers to redeem 1, 000 card points for $5 off on a purchase of at least $5.01.

The rewards points are part of a broader point-of-sale system that Dollar General uses from FIS, a fintech. The rewards system helps merchants to increase spending per transaction, according to FIS's website.

Dollar General and Western Union started working together in 2019. The partnership allows consumers to start a domestic or international money transfer on Western Union's website or app, then pay for it at a Dollar General location.

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The partnership was one of Dollar General's first ventures into financial services. It also expanded Western Union's agent network, which numbered about 40, 000 at the time, by 30%.

In January, Dollar General joined the Ibotta Performance Network. There, consumers can look for cash back opportunities across different retailers. Dollar General is the first dollar store to join the network, the company said.

While more consumers are focused on essentials like food as inflation pressures budgets, experts say that Dollar General may also be struggling to persuade shoppers who come in for food to buy other things.

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Food inflation has reached historic highs over the last year, with prices for certain grocery basics, such as eggs,  creating challenges for discount-focused retailers. Earlier this week, fellow dollar store chain Dollar Tree announced it was pausing stocking eggs due to high prices.

Dollar General has been gradually ramping up its grocery business, bringing fresh and frozen food to more stores and building out a self-distribution model for these products as part of its DG Fresh initiative. The company said it would have fresh produce in 5, 000 of its stores by the end of 2023 and plans to bring these items to 10, 000 of its more than 19, 000 locations over the next few years. 

Dollar stores, in general, have been gaining market share in the grocery sector as inflation bites and shoppers look for cheaper alternatives. According to a recent report from Coresight Research, Dollar Tree and Dollar General ranked in the top five retailers from which consumers bought food in 2022.

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Grocery is a low-margin business, but the idea is that having a grocery assortment drives more customers to stores and leads to repeat visits. When these customers come to the store, the hope is that they'll be tempted to buy more. 

But the flip side to this is that by offering groceries in its stores, it could actually end up cannibalizing sales elsewhere. 

Fresh is great, but it can be very disruptive, Simon Johnstone, senior director of Retail Insights at Kantar, said in a recent call with Insider. 

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Discount shoppers, who come into the store and have a limited amount to spend, might end up using their allotted amount to buy groceries rather than shopping for other items, such as homeware, which generates higher margins for Dollar General. 

Dollar General shoppers are still employed but are relying more on savings, credit cards, and, quite frankly, borrowing money from friends, Dollar General CEO Jeff Owen said on Thursday during the company's fourth-quarter earnings call.

That financial pressure is leading the average customer to buy fewer items and focus on essentials like food, he said. We're seeing her shift her purchases more to consumables, Owen said.

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But Neil Saunders, managing director of GlobalData Retail, said a focus on essentials like food isn't the only reason why shoppers might be turned out from buying other items in its stores. Its shabby and cluttered stores may also be to blame, he said.

While Dollar General has been steadily improving the offer ... there is still more work to do to improve the proposition, he said Thursday.

The aim here should be to entice consumers with some interesting displays and offers that wow them ... This will encourage higher-income shoppers to buy more and will serve the company well once lower-income shoppers are less affected by inflation, he added.

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