Dollar General is letting customers buy online and pick up in store which could help attract a younger demographic, analysts say
By Sara Castellanos Oct. 9, 2019 2:38 pm ET Dollar General Corp. is working on making it possible for customers to buy its wares online and pick them up at a nearby store, a move that analysts say could help the retailer attract a younger demographic.
It is the latest initiative in Dollar General’s broader digital strategy, Chief Information Officer Carman Wenkoff said. The company already offers a mobile-app feature that lets customers total up items in store so they know exactly what they will pay. “We’ve always tried to be at the leading edge of value and convenience, and we hear our customers talking about this a lot,” Mr. Wenkoff said, referring to the ability to purchase online and pick up in store. The discount retailer with about 16,000 stores in 44 states plans to test the system in the coming months, initially through a mobile app. Mr. Wenkoff declined to give the number of stores that will participate. Retailers including Walmart Inc., Best Buy Co. and Target Corp. give customers the option to “click and collect.” But the feature isn’t universal at deep-discount chains. Dollar Tree Inc. allows customers to purchase items online and have them shipped to a store, while Five Below Inc. doesn’t. “What we’ve tried to do with technology is to come up with a strategy on how to enhance the shopping experience,” said Mr. Wenkoff, who joined Dollar General in 2017 from sandwich chain Subway, where he was CIO and chief digital officer. Dollar General hired him in part to improve its online payment tools, loyalty programs and other customer-facing services. The retailer has had an e-commerce site for about eight years. To make the buy-online, pick-up-in-store feature work, Mr. Wenkoff’s team will need to integrate the mobile app with several data systems and applications that have information about the company’s supply chain and inventory. If an item is out of stock, the app could suggest similar items that are available. It could also let customers use digital coupons on items purchased online. About 45% of Dollar General customers use digital tools from Dollar General or other retailers when shopping, the company said. Such “digitally engaged customers” spend twice as much as the average checkout receipt, which is about $12, Dollar General said. The company’s digital tools include the “cart calculator” feature in one of its mobile apps, which lets in-store customers calculate the exact total of items in their cart, including taxes and discounts, before they go up to the cash register. It is available in about 75% of stores. Another feature lets customers know when a coupon is available for an item in their cart. In about 250 stores, the mobile app also lets customers scan and pay for items in store using their phones, skipping the checkout line. The feature is expanding to 500 more stores by early next year, the company said. The initiative to buy online and pickup in store will be a slow test, said Dollar General’s chief executive, Todd Vasos, in an August earnings call: “We want to make sure that the consumer resonates with that.” Some cost-conscious customers who are pressed for time will find that the ability to order items online and pick them up in store adds another level of convenience, said Anthony Chukumba, managing director and senior research analyst at Loop Capital Markets LLC. But the move is unlikely to make a significant impact for most customers because Dollar General stores aren’t huge and items are easy to find, he said. Marshal Cohen, chief retail analyst at market-research firm NPD Group Inc., said the move could help the company attract customers between the ages of 21 and 37, who are set to become more cost-conscious as the economy shows signs of cooling down. Historically, Dollar General’s average consumer has been between 35 and 55, Mr. Cohen said. The younger demographic is digitally savvy and “all about convenience,” he said. “Nobody even wants to get out of the car anymore.”Write to Sara Castellanos at sara.castellanos@wsj.com
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