The coronavirus pandemic caused a lot of well-known retailers to close their doors on a permanent basis, leaving malls and shopping centers alike with vacancies to fill -- and leaving real estate investors very worried. The good news, however, is that one breed of retailer has managed to do quite well during the pandemic -- discount stores.
Consumers have been flocking to dollar stores over the past year and change because they not only offer affordable products but are reasonably accessible. And now, many of those brands are seeking to grow their customer base even more.
One such brand is Dollar General (NYSE: DG). Last quarter, the discount giant managed to open 260 new stores. And it has plans to potentially double its current line of 17,426 stores to 34,000 stores or more over time.
But it's not just that Dollar General wants to open more locations. It also wants to expand its product line. And now, the discount giant has set its sights on healthcare.
Becoming even more essential
One reason why dollar stores did so well during the pandemic is because they were effectively essential, selling household items and nonperishable goods (and, in some cases, perishables as well). Now, Dollar General is taking that concept one step further by foraying into healthcare.
The chain has hired its first chief medical officer to oversee all things health-related. And it's also expanding its line of cold medicines, dental and medical care products, health aids, and feminine hygiene products.
The move is a smart one. It's estimated that 75% of the U.S. population lives within five miles of a Dollar General store. Furthermore, many of those stores are located in rural areas, where consumers often lack access to not just pharmacies but medical offices and healthcare facilities. And while Dollar General isn't looking to take the place of an actual doctor, it is looking to become more of a healthcare destination so that consumers don't have to make a separate trip to a Walgreens or CVS.
Shopping centers need a steady stream of tenants to thrive, and in the wake of the pandemic, they may be down a number of them. The good news is that Dollar General is getting increasingly creative in attracting new customers while working to retain current ones. In addition to venturing into healthcare, the discount giant is opening a line of Popshelf stores, which will feature slightly higher-end but still-discounted household and beauty products.
Dollar General is also looking to expand its grocery offerings to include more refrigerated and frozen products. Right now, many of its stores stock perishables but in limited supply due to limited cooling space. Once it's able to offer an extensive line of healthcare products, it will truly become a one-stop shop for consumers across the country. And that means it's apt to have staying power at a time when shopping centers could really benefit from reliable, long-term tenants that are in a solid position to commit to extended lease terms.