Chief Operating Officer at Dollar General
Thanks, John. Let me take the next few minutes to update you on our operating priorities and strategic initiatives. Our first operating priority is driving profitable sales growth. We are off to a great start to the year, as we continue to make good progress across our portfolio of growth initiatives.
Let me take you through some of the recent highlights. Starting with our Non-Consumables Initiative or NCI, which was available in more than 13,000 stores at the end of the first quarter. We continue to be very pleased with the strong sales and margin performance we are seeing across our NCI store base, including continued incremental 2.5% total comp sales increase on average in NCI stores in their first year post implementation, along with a meaningful improvement in gross margin rate. We expect to realize ongoing sales and margin benefits from NCI in 2022, and are on track to complete the rollout across nearly the entire chain by the end of the year.
Moving to our pOpshelf store concept, which further builds on our success and learnings with NCI. As a reminder, pOpshelf aims to engage customers by offering a fun, affordable and differentiated treasure hunt experience, delivered through continually refreshed merchandise, a differentiated in-store experience and exceptional value, with the vast majority of our items priced at $5 or less.
During the quarter, we opened 11 new pOpshelf locations, bringing the total number of stores to 66. Additionally, at the end of Q1, we had a total of 25 store-within-a-store concepts, which incorporates a smaller footprint pOpshelf store into one of our larger format Dollar General market stores, as we continue to be pleased with the results. We are on track to nearly triple the pOpshelf store count this year, as well as open up to 25 store-within-store concepts, which would bring us to a total of more than 150 stand-alone pOpshelf locations and a total of approximately 50 store-within-a-store concepts by year end.
We continue to anticipate year one annualized sales volumes for pOpshelf locations to be between $1.7 million and $2 million per store and expect the initial average gross margin rate for these stores to exceed 40%. Overall, we are very pleased with the results from this unique and differentiated concept, and we are excited about our goal of approximately 1,000 pOpshelf locations by end of 2025.
Turning now to DG Fresh, which is a strategic multi-phase shift to self-distribution of frozen and refrigerated goods, along with a focus on driving continued sales growth in these areas. As a reminder, we completed the initial rollout of DG Fresh across the entire chain in 2021, and are now delivering to more than 18,000 stores from 12 facilities. The initial objective of DG Fresh was to reduce product cost on our frozen and refrigerated items, and we continue to be very pleased with the savings we are seeing.
Another important goal of DG Fresh is to increase sales in our frozen and refrigerated categories. We are pleased with the performance on this front, including enhanced product offerings in stores and strong performance from our perishables department.
Looking ahead, we expect to realize additional benefits from DG Fresh, as we continue to optimize our network, further leverage our scale, deliver even wider product selection, and build on our multiyear track record of growth in cooler doors and associated sales. And while produce is not included in our initial rollout, we continue to believe that DG Fresh provides a potential path forward to expanding our produce offering to more than 10,000 stores over time. To that end, we offered produce in more than 2,300 stores at the end of the first quarter, with plans to expand this offering to a total of more than 3,000 stores by the end of 2022.
Notably, DG Fresh has also extended the reach of our cooler expansion program. In fact, during Q1, we added more than 17,000 cooler doors across our store base, and we are on track to install more than 65,000 cooler doors in 2022.
Importantly, despite the meaningful improvements we have made to date as a result of DG Fresh, we believe we still have significant incremental opportunity to drive additional returns with this initiative in the years ahead.
Turning now to an update on our expanded health offering, which consists of up to 30% more feet of selling space, and up to 400 additional items as compared to our standard offering. This offering was available in nearly 1,800 stores at the end of Q1, and we are on track to expand to a total of more than 4,000 stores by the end of 2022.
Looking ahead, our plans include, further expansion of our health offering with the goal of increasing access to basic healthcare products and ultimately services over time, particularly in rural America. In addition to the gross margin benefits associated with the initiatives I just discussed, we continue to pursue other opportunities to enhance gross margin, including improvements in private brand sales, global sourcing, supply chain efficiencies, and shrink reduction.
Our second priority is capturing growth opportunities. Our proven high-return, low-risk real estate model has served us well for many years and continues to be a core strength of our business. In the first quarter, we completed more than 800 real estate projects, including 239 new stores, 532 remodels and 32 relocations. For 2022, our plans remain to execute 2,980 real estate projects in total, including 1,110 new stores, 1,750 remodels, and 120 store relocations.
As a reminder, we expect approximately 800 of our new stores in 2022, to be in our larger 8,500 square foot store format, as we respond to our customers' desire for even wider product selection. With about 1,200 square feet of additional selling space compared to a traditional store, these larger formats allow for expanded high-capacity cooler counts, an extended queue line and a broader product assortment, including NCI, our larger health and beauty offering and produce in many stores.
Importantly, we continue to be very pleased with the unit economics of this larger format. While the initial cost to open this larger store is about $300,000, including fixed assets and working capital, we are seeing increased sales productivity and continue to generate returns in the range of 20% to 22%.
In addition to our planned Dollar General and pOpshelf growth in 2022 and included in our total new store goal, we are also very excited about our plans to expand internationally, the goal of opening up to 10 stores in Mexico by the end of 2022. Overall, our real estate pipeline remains robust, with more U.S. brick-and-mortar stores than any retailer, we are excited about our ability to capture significant growth opportunities in the years ahead.
Next, our digital initiative, which is an important complement to our physical footprint, as we continue to deploy and leverage technology to further enhance convenience and access for customers. Our efforts remain centered around building engagement across our digital properties, including our mobile app. We ended Q1 with more than 4 million monthly active users on the app, and expect this number to grow, as we look to further enhance our digital offerings.
Our partnership with DoorDash continues to yield strong results, as we look to extend the value offering of Dollar General, combined with the convenience of same-day delivery in an hour or less. This offering was available in about 11,000 stores at the end of Q1 and we continue to be pleased with the early results, including better-than-expected customer trial, strong repurchase rates, high levels of sales incrementality, and a broadening of our customer base.
In addition, we are excited about the continued growth of our Dollar General Media Network, which is becoming increasingly more relevant in connecting our participating brand partners, with over 90% of our unique customer base. After establishing the foundation over the last few years, we are poised to meaningfully grow this business in 2022 and beyond, as we expand the program and further enhance the value proposition for customers and brand partners, while increasing the overall net financial benefit for the business.
Most recently, we launched a suite of financial offerings, as we look to further leverage our unique footprint to provide our customers with additional services they want and need. These services include a spendwell-branded bank account and debit card offering, a Buy Now, Pay Later pilot in select number of stores, and a test of a rewards redemption program. These offerings aim to provide greater financial empowerment for customers, while driving incremental traffic and profitability within our stores.
Overall, our strategy consists of building a digital ecosystem, specifically tailored to provide our customers with an even more convenient, frictionless and personalized shopping experience and we are pleased with the growing engagement we are seeing across our digital properties.
Our third operating priority is to leverage and reinforce our position as a low-cost operator. We have a clear and defined process to control spending, which continues to govern our disciplined approach to spending decisions. This zero-based budgeting approach, internally branded as Save to Serve, keeps the customer at the center of all we do, while reinforcing our cost control mindset.
Our Fast Track initiative is a great example of this approach, where our goals include increasing labor productivity in our stores, enhancing customer convenience and further improving on-shelf availability. The first phase of Fast Track consisted of both rolltainer and case pack optimization, which has led to the more efficient stocking of our stores. The second component of Fast Track is self-checkout, which provides customers with another flexible and convenient checkout solution, while also driving greater efficiencies for our store associates. Self-checkout was available in more than 8,000 stores at the end of Q1 and we continue to be pleased with our results, including strong customer adoption rates.
As a result of the success of self-checkout and popularity with customers, we have recently launched a pilot of stores that are entirely self-checkout. While our associates will remain available to assist customers if needed in these stores, we believe this 100% self-checkout option could further enhance the convenience proposition, while enabling our associates to dedicate even more time to serving customers. We plan to ultimately test this layout in about 200 stores throughout 2022.
Looking ahead, we are on track to expand our self-checkout offering to a total of up to 11,000 stores by the end of the year, as we look to further extend our position as an innovative leader in small-box discount retail.
Moving forward, the next phase of Fast Track consists of increasing our utilization of emerging technology and data strategies, which includes putting new digital tools in the hands of our field leaders. When combined with our data-driven inventory management, we believe these efforts will reduce store workload and drive greater efficiencies for our retail associates and leaders.
I also want to highlight our growing private fleet, which consisted of more than 950 tractors at the end of Q1 as compared to over 700 tractors at the end of 2021. As a reminder, we are focused on significantly expanding our private fleet in 2022 as we plan to more than double the number of tractors from 2021, which we expect will account for approximately 40% of our outbound transportation fleet by the end of the year. As a result of this planned growth, we believe our private fleet will become an increasingly significant competitive advantage as it gives us greater operational control within our own supply chain, while further optimizing our cost structure. Our underlying principles are to keep the business simple, but move quickly to capture growth opportunities, while controlling expenses and always seeking to be a low-cost operator.
Our fourth operating priority is investing in our diverse teams through development, empowerment and inclusion. As a growing retailer, we continue to create new jobs and opportunities for personal and professional development and ultimately, career advancement. To that end, we recently began offering access to 100% employer-paid college degree programs for all full-time employees. In addition, all Dollar General employees and their immediate family members now have access to online, on-demand, self-paced learning platform, that provides college level general education courses at no cost to them, which is intended to help initiate or further their education journey and development.
These programs are in addition to several other existing development programs, including our fully paid private fleet driver training program, as well as the ability to earn undergraduate credits through the American Council on Education upon completion of our store manager training program. We continue to innovate on additional development opportunities for our teams to provide ongoing opportunities for career advancement, and in turn, meaningful wage growth. Our internal promotion pipeline remains robust, as evidenced by internal placement rates of more than 75% at or above the lead sales associate position. Additionally, approximately 15% of our private fleet team began their careers with us in either a store or distribution center.
We continue to monitor our competitive position in the market closely and we are pleased with our turnover rates, staffing levels, and applicant flow further validating our belief that we are taking the right actions to attract and retain talent. We believe the opportunity to start and develop a career with a growing and purpose-driven company is a unique competitive advantage and remains our greatest currency in attracting and retaining talent.
Overall, we continue to make great progress against our operating priorities and strategic initiatives and we are confident in our plans to drive long-term sustainable growth, while creating meaningful value for our shareholders.
In closing, I am proud of the team's strong performance and we are pleased with our great start to the year. I want to thank our more than 164,000 employees for their hard work, as we all focus on fulfilling our mission of serving others every day, and I am excited about our plans for the year ahead.
With that, operator, we would now like to open the lines for questions.