Dollar General

One retailer that’s seen a positive impact on its bottom line during the COVID pandemic is Dollar General. According to Forbes, the nation’s largest dollar-store chain has made a splash during this stretch, thanks in large part to Dollar General’s push to amplify its grocery offerings. The chain added more fresh and frozen food across its 17,000 locations and maneuvered to drive down costs by building its own grocery distribution network.

Given the reticence of many shoppers to make multiple shopping trips, the chain has additionally made an effort to curate its image as a one-stop shop for everything from groceries to over-the-counter medications and big box staples. In short, anything you might need to stock up on, Dollar General is on a mission to provide it. 

It would seem the effort is paying off. In addition to the revenue spike, leadership is encouraged with the progress made, according to Forbes, which reported that chief executive Todd Vasos, told investors and analysts that he feels Dollar General is “the most relevant we have been in many, many years.”

Meanwhile, Matthew Boss, a JPMorgan analyst, is among those calling for discounters such as dollar stores and TJ Maxx to emerge stronger when the pandemic subsides — in the case of Dollar General, it’s a question of building on existing momentum.

Modiv's portfolio contains a number of Dollar General locations as well as a Dollar Tree location. These properties serve a key role in their communities by offering staple supplies at reasonable prices and are often well placed to serve markets with few other options for groceries and household wares. In the landscape of California real estate investing — the state we’re headquartered in — the instinct is often to look at the biggest, flashiest properties. We have a somewhat different outlook.

We’ve built our portfolio with an emphasis on “mission critical” properties. For us, that holds two meanings. Either the building houses a component of a given business that is essential — say the corporate headquarters or supply warehouse — or a storefront for an essential business, something we’ve all come to understand much more explicitly in the wake of the COVID-19 pandemic. 

Dollar General and similar stores certainly meet that criteria. In good times, these stores serve the frugal and offer an option to shoppers simply looking for convenience or proximity. In lean times, these stores are one of the first outposts for consumers looking to tighten up their budgets. In either scenario, the properties have consumer appeal, and therefore, predictable demand that allows us to invest with confidence.

Dollar General at a Glance

  • With more than 17,000 stores in 46 states, Dollar General offers an array of low-priced items including food, snacks, health and beauty aids, cleaning supplies, basic apparel, housewares, seasonal items, paper products and more. 
  • Headquartered in Goodlettsville, Tennessee, the company was founded in 1939 as a family-owned store. In 1968, Dollar General went public and was listed on the New York Stock Exchange.
  • After its successes and strategic shifts in 2020 and the years leading up to it, Dollar General is currently a Fortune 100 company, ranked No. 91.

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The views and opinions expressed in this commentary reflect Modiv Inc.’s (together with its affiliates, “Modiv”) beliefs and observations in commercial real estate as of the date of publication from sources believed by Modiv to be reliable and are subject to change. Modiv undertakes no responsibility to advise you of any changes in the views expressed herein. No representations are made as to the accuracy of such observations and assumptions and there can be no assurances that actual events will not differ materially from those assumed. The forward-looking statements in this paper are based on Modiv’s current expectations, estimates, forecasts and projections, and are not guarantees of future performance. Actual results may differ materially from those expressed in these forward-looking statements, and you should not place undue reliance on any such statements. These materials are provided for informational purposes only, and under no circumstances may any information contained herein be construed as investment advice or as an offer to sell or a solicitation of an offer to buy an interest in any Modiv program or offering. Alternative investments, such as investments in real estate, can be highly illiquid, are speculative, may not be suitable for all investors, and there is no guarantee that distributions will be paid.