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April 22, 2024

For grocery format junkie, DG Market an intriguing newcomer

Contributed DG Markets, a Dollar General store that offers produce, meat and other foods, is coming to Connecticut.
By David Krechevsky

Wayne Pesce admits that he’s something of a grocery store junkie.

The president of the Connecticut Food Association, which has about 30 grocery store members with nearly 300 locations across the state, says he’s intimately familiar with each variety.

“There’s not a supermarket format in the state of Connecticut that I haven’t walked through 100 times,” he said. “You name it — Aldi, Walmart, Target, Stop & Shop, Big Y — I’m in all of those stores.” 

One format he has yet to walk through, though, is the newest to Connecticut: DG Markets. If you’re not familiar with it, it’s the grocery version of a Dollar General store.

According to comments provided via email to Hartford Business Journal by Dollar General, based in Goodlettsville, Tennessee, the national retail chain is “currently finalizing our due diligence phase for a new DG Market location in Middlebury.” 

That is the soon-to-be former location of the Four Corners Grocery Store, which has been a fixture in Middlebury for 83 years. Owner Joe Dinova, who turns 70 years old this year and inherited the store from his father, said recently he plans to retire.

He also has said he intends to lease the 12,000-square-foot building at 600 Middlebury Road to DG Market.

Dollar General said it expects to open in that location “by later this summer.” 

It also said it recently opened a DG Market at 125 Westbrook Road in Essex, “and we are currently under construction on a new DG Market location at 75 South Main St., in Thomaston.”

The company added that it does not disclose its future store plans “by format or state for competitive reasons,” so it would not confirm that another store is planned in Manchester — a site mentioned by Dinova — nor how many DG Markets it expects to open overall in Connecticut.

In February, Dollar General announced it had opened its 20,000th Dollar General store nationwide. That total includes about 80 locations in Connecticut. 

The company also said it now has more than 5,400 stores nationwide that offer produce, including DG Markets, with plans to add produce in “approximately 1,500 additional stores” in the current fiscal year. 

The DG Market concept, first announced in the company’s fourth-quarter 2022 earnings report, is a version of Dollar General that offers fresh produce, meat and other foods you won’t find on a typical Dollar General shelf.

“DG Market stores offer expanded produce, refrigerated and frozen food offerings, dairy products and more, in addition to an assortment of fresh meats, alongside the general merchandise customers trust Dollar General to provide,” the company said in its email. “Our fresh produce offering includes a curated assortment of lettuce, tomatoes, onions, apples, strawberries, potatoes, sweet potatoes, lemons, limes, salad mixes, and more.” 

Dollar General concedes it “is not a grocer,” but said it understands “the affordable access our stores provide to customers, often in communities where other retailers cannot or will not serve.” 

It also said that approximately 75% of the U.S. population lives within 5 miles of one of its stores, and with 5,400 locations offering produce it has “more individual points of produce distribution than any other U.S. mass retailer or grocer.”

The retailer said it selects sites for its stores, both Dollar General and DG Markets, by taking a number of factors into consideration, carefully evaluating each new location to ensure “we can continue to meet our customers’ price, value and selection needs.”

It added that each store provides access to affordable products, creates jobs and generates tax revenue, while also providing opportunities for literacy and education grants through its Dollar General Literacy Foundation.

Pesce, the grocery store connoisseur, said he’s “very curious” about what the new DG Market concept looks like. 

“I know what Dollar General looks like,” he said. “Consumers know who Dollar General is too, so it’s not like they’re landing a spaceship without some value to the brand. The question becomes, can they attract people who don’t shop in their stores today for meat and produce to come in and buy those products? Some of it is going to be about the quality of the products, because there’s going to be value there. That’s what they do.”

Supply chain will be key

Purdue University recently released the results of a survey that found 64% of respondents predicted food prices would rise in the next year, with the average increase predicted to be 3.7%.

Earlier this month, The Wall Street Journal published a report that looked at how far $100 goes at the grocery store after five years of food inflation. It found that items that cost $100 combined in 2019 now cost $136.50.

So, a national retail chain known for low prices that now offers produce and meat is likely to attract at least some shoppers looking for a bargain. 

Pesce, who lives in Middlebury and is friends with Dinova, said DG Market replacing the Four Corners Grocery will be interesting because it is “a low-price discounter” moving into a “fairly affluent town.”

He noted that Dinova owns one store and doesn’t have the size to compete with Dollar General.
“They have the supply chain,” he said. “For any food retailer, or even any retailer that’s doing business today, it’s all about the supply chain.”

The unanswered question, he said, “is what does the store look like when you walk in and how do people react to it?”

To help create a positive reaction, the produce needs to be locally sourced, Pesce said.

Unlike meat, he said, “produce is perishable, it can’t be frozen. It doesn’t have a 20-day window, so they will attempt to buy that as close to their supply chain as possible. Does that mean they’re going to start buying from farmers in Connecticut and New Jersey and western Massachusetts like our members do right away? That depends on their footprint and their ability to do that.”

Pesce said there are plenty of local sources for produce, including distributors Jarjura’s in Waterbury and Freshpoint Connecticut in Hartford. But he wondered how much cheaper such purchases would be when compared to discounters like Walmart, which has more and larger stores.

DG Markets smaller footprint, though, will help keep labor and energy costs down, he said.

“Any low-price leader right now is helping consumers stretch their dollar a little bit more,” Pesce said. “Because, let’s face it, right now (grocery) inflation is high and people are making choices based on their budget.”

The other aspect that could affect a shopper’s decision is the quality of service, he said, adding that some consumers will pay more for that.

Still, the grocery format junkie in him says he will visit a DG Market to get a sense of its format.

“Yeah, I’ll be one of the first people to walk in and check them out” when they open in MIddlebury, he said. “Because there’s going to be value there. It’s what they do.”

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