Dollar General, meanwhile, is betting on tobacco products to be a big sales generator for its 11,000 stores. The Goodlettsville, TN discount chain started selling cigarettes for the first time in 2013 and says the move has boosted overall sales.
Dollar General’s fiscal third-quarter profit rose 14% as foot traffic improved and shoppers spent more per visit. Comparable same-store sales were up 4.4%.
The reason? Executives say consumers who now come in to buy cigarettes are often picking up a few more items while they’re visiting.
Rick Dreiling, CEO and chairman of Dollar General explained the strategy on a earnings call last quarter, “When we started the tobacco journey, one-third of our cigarette sales were by themselves, one-third were what we would call a smoke and a coke, where they would grab a cigarette and maybe a soda or a chip. And then one-third is where the cigarettes were actually going into a basket that was beginning to grow,” he said.
In the third quarter the number of people buying more than just cigarettes grew to 44% as cigarette-only purchases are declined to 26%. “So we’re beginning to convert the cigarette customer into a shopper,” Dreiling said.
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