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CEO Todd Vasos said the company’s new push is inspired by customers who said they want more convenient and affordable health-care products and services.
“Our goal is to build and enhance affordable healthcare offerings for our customers, especially in the rural communities we serve,” he said in a press release.
The fast-growing discounter has more than 17,400 stores across the country, including many in rural areas that don’t have many other grocers or major pharmacies nearby. However, it has been criticized by some lawmakers for selling few healthy foods, such as fresh fruits and vegetables, and boxing out other retailers that would otherwise open in the areas and sell a wider array of groceries.
In recent years, Dollar General has added fresh produce and meats to more of its stores. It has fresh produce in more than 1,300 stores — or roughly 7% of its total stores. It has said it may expand that assortment to up to 10,000 stores.
It has piloted new ways to provide medical care, too. Last month, it offered free Covid-19 testing at select locations through a partnership with the Virginia Department of Health. The Centers for Disease Control and Prevention said it was in talks with the company about turning stores into Covid vaccine sites, though the CDC and Dollar General have yet to announce any official plans.
Dollar General’s new and remodeled locations will also make room for more aisles of health products and coolers of food. The company said in the spring that it is building bigger stores, as it opens more than 1,000 new locations this year.
On Wednesday, the retailer said it hired Dr. Albert Wu as its chief medical officer. He previously worked for McKinsey & Company, where he led a team that focused on health-care related projects, such as providing care to thousands of rural patients, modeling how to support pandemic relief efforts and designing a digitally-driven health insurance.
Wu joined Dollar General on Monday, according to the press release. Dollar General said he will focus on building relationships with companies that provide health-care products and services, so the retailer can roll out its own offerings.
In a research note, Jefferies analyst Corey Tarlowe said the expansion into health care will help the retailer gain market share and boost profitability, as customers visit stores more regularly and toss additional items into shopping carts. Drugstores, in particular, have been a place where Dollar General is stealing market share, he said. Dollar Store’s prices tend to be 40% cheaper than drugstores, 20% cheaper than grocery stores and in line with mass-market retailers, according to the firm’s research.
With the effort, he said Dollar General is “further solidifying the company’s moat” as a leader among value and discount retailers.