Dollar General NYSE: DG executives said the retailer expects its core customers to remain under pressure through the second half of 2026, while the company continues to pursue margin recovery, delivery expansion and value-focused merchandising initiatives.
Chief Executive Officer Todd Vasos said sustained inflation and higher fuel prices have affected shoppers across income groups. Dollar General’s core consumer, generally those earning $40,000 to $45,000 or less, has been visiting stores more frequently but purchasing fewer items during each trip, he said.
“Any time that gas price gets anywhere close to $4 and then crests $4 a gallon, the customer changes their shopping behavior,” Vasos said. He added that middle- and upper-middle-income consumers are increasingly displaying similar behaviors, while some customers earning more than $100,000 say they no longer feel like high-income consumers because of broader cost pressures.
Vasos said Dollar General is within five miles of 75% of the U.S. population, positioning its stores as a convenient option for shoppers looking to limit driving. He said the company does not see a structural development that would materially improve conditions for its core consumer in the second half, although lower gasoline prices could provide some relief.
Value assortment and customer retention
The company is emphasizing its $1 merchandise offering as customers seek affordability. Vasos said Dollar General has more than 2,000 items priced at $1 or less, including products throughout stores and in its Value Valley section.
Chief Operating Officer Emily Taylor said Value Valley comparable sales rose 16% in the second quarter. The company has expanded the assortment in the section, added off-shelf displays and increased its seasonal $1 assortment for the second half by 40% from a year earlier, she said.
Dollar General also recently introduced a frozen-food door containing $1 products and plans to add more of those doors during the second half of the year, Vasos said.
On pricing, Vasos said the company seeks to balance data-driven pricing with judgment and views price increases as a last resort. He said Dollar General’s price gaps relative to mass, drug and grocery competitors have remained consistent over time, and the company uses its scale and limited-SKU model in negotiations with consumer packaged goods suppliers.
Taylor said the retailer has historically retained customers who begin shopping at Dollar General during difficult economic periods, citing past periods including 2008, 2009 and 2013. She said targeted marketing offers based on customer purchase patterns could further support retention.
Margins, supply chain and delivery
Executive Vice President and Chief Financial Officer Donny Lau said the company remains confident in its long-term targets of 2% to 3% same-store sales growth and a 6% to 7% operating margin by 2028.
Lau said Dollar General had previously outlined a goal of 270 basis points of gross-margin expansion over a three- to four-year period and delivered more than 100 basis points of margin expansion last year. He said the company also delivered 80 basis points of shrink improvement last year, matching its previously identified opportunity over a two- to three-year timeframe.
Other margin drivers include lower damages, growth in non-consumables, the DG Media Network, category management and supply-chain productivity, according to Lau. He said non-consumables have outgrown consumables for six consecutive quarters, while the company is targeting non-consumables at 20% of sales, up from roughly 18% to 18.2% currently.
In supply chain, Lau said Dollar General expects continued fixed-cost leverage as sales grow and sees productivity opportunities through information technology. About 50% of the company’s outbound transportation needs are handled by its private fleet, a share the company expects to increase over time, he said.
Executives also discussed artificial intelligence as a potential source of future productivity, particularly in supply chain, inventory and store operations. Lau said the company’s long-term framework does not include AI-related benefits, making any resulting gains potential upside.
Delivery contributed 40 basis points to comparable-sales growth in the second quarter, Taylor said. Dollar General offers both marketplace and first-party delivery and continues to see more than 80% incrementality from the service, she said. More than 1 million customers were first introduced to Dollar General through delivery and later shopped in physical stores, according to Taylor.
The retailer plans to pilot a delivery subscription offering at the end of 2026 and expects to scale it next year. Taylor said increased digital engagement could also support the DG Media Network, which generated $170 million in retail-media volume last year.
Leadership transition
Vasos, who said he will leave the CEO role in January 2027, said he expects to remain a senior advisor and board member through at least April 1 to support the transition. The company selected JJ Fleeman, formerly a U.S. operating chief executive within Ahold Delhaize, as Vasos’ successor.
Vasos said Dollar General’s board and management team remain aligned behind the company’s current priorities and noted that the company has strengthened its senior leadership team in recent years. He said Fleeman has been briefed on the company’s strategic initiatives ahead of joining Dollar General.
About Dollar General (NYSE:DG)
Dollar General Corporation NYSE: DG is a discount retailer that operates stores offering everyday essentials at low prices. Its merchandise assortment includes consumable products such as food, snacks, cleaning supplies, paper products, and personal-care items, along with seasonal goods, basic home products, apparel, and select health and beauty products.
The company serves primarily rural and suburban communities, with stores located throughout the United States. Dollar General also operates related retail formats, including DG Market, DGX, and pOpshelf, which offer assortments tailored to different shopping needs and locations.
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