Dollar General to target food deserts with its DG Market concept
Goodlettsville, Tenn. — Dollar General on Monday told analysts the company plans to open 40 DG Market concepts in 2012 in both new and existing markets based on the success of the concept.
"The results of the DG Market remodels we have completed to date and the early success of our five DG Market stores in Las Vegas are very encouraging," Dollar General chairman and CEO Rick Dreiling told analysts Monday morning. "We introduced our updated general market banner in Nevada and these stores are performing well above our initial expectations. These are our first new Dollar General Markets since early 2007 and we’re excited about introducing the concept into new markets."
DG Market stores offer a wider variety of dry groceries and perishables, in addition to the general merchandise selections at a typical Dollar General store.
DG Markets have average annual sales of $4 million to $5 million, versus the $1.4 million across the regular formats, according to David Tehle, Dollar General CFO and executive VP. "The raw margin dollars and profit margin dollars that we get out of a DG Market is very impressive. Now, the mix is more consumable so the margin percent is somewhat lower but again the dollars, the raw dollars we get because of the volume is very impressive," he said. "We also think there’s an opportunity in smaller markets that are what we call food deserts to add tremendous volume where we can go into a town that really needs a DG Market and get a lot of volume and get a lot of market share. That’s really the way we’re playing the DG Market."
"We believe the DG Market concept is well positioned to serve food deserts in both rural and metro areas and reinforces DG’s heritage of serving the underserved," Dreiling added.
Companywide, Dollar General also is looking to further expand its cooler presence. Currently, new stores are opening with 14 to 16 coolers and the company will be installing four additional cooler doors in approximately 1,200 existing locations to better serve their "time conscious customer."
"Fresh and refrigerated foods helped us drive customer traffic and increase basket size by serving a greater share of our customers’ needs," Dreiling said.
Retail rents fall 1.6% year over year, with national average at $14.65
Chicago — Retail rents fell 1.6% year over year, and inched down 0.5% since the last quarter to the current national average of $14.65, according to Jones Lang LaSalle’s North America Year-end Retail Outlook. National retail vacancy levels posted a 0.1% quarter-over-quarter drop from 7.1% to 7.0%, with open-air centers at the high end with 10.9% vacancy, and general retail at the low end with 4.7% vacancy.
New York and San Francisco continue to be the healthiest markets, with vacancy levels of 2.1% and 3.0%, respectively, the study found. Atlanta and Dallas show the largest vacancies at 10.2% and 9.1%, respectively.
Among the markets tracked, Chicago continues to report the highest absorption, with an impressive 2.0 million sq. ft. in third quarter 2011. Boston and Houston were not far behind with 1.98 and 1.75 million sq. ft, respectively. Only Atlanta showed negative net absorption this quarter with -352,909 sq. ft., though San Francisco’s poor absorption continued into this quarter with only 19,942 sq. ft. absorbed due to store closings and relocations.
In other study highlights:
- Rents fell 1.6% year over year and inching down 0.5% since the last quarter to the current national average of $14.65.
- Investment sales volume of significant retail properties totaled $8.2 billion in third quarter 2011, down sharply from the second quarter, when data was inflated by the $9.2 billion Blackstone/Centro transaction.
- All of the 18 regional markets that Jones Lang LaSalle tracks are currently tenant favorable and are likely to remain that way through at least the first half of 2012. Houston is the only market that is showing a significant rise in rental rates.
In the distressed market, total retail properties now stand at $28.7 billion, signaling that the sector is now 50% t worked out of its distress pool. Interestingly, distress made up a noticeably lower proportion of total sales this quarter at just 6% but workouts have cut almost $3.5 billion from the distress pool. Restructurings accounted for a significant portion of this, totaling $4.0 billion in the third quarter. New inflows to distress were also much lower this quarter, adding only $1.4 billion. Markets with the heaviest distress include Phoenix, Las Vegas and Chicago.
There continues to be wide geographic disparity in retail property sales, with the southeast region in the lead with $6.67 billion year to date. The West was second with $5.51 billion in transactions, followed by the Midwest ($5.25b), Mid-Atlantic ($4.25b), Northeast ($4.23b) and Southwest ($3.72b).
Apple will open a store in Manhattan’s Grand Central Terminal
New York City — Apple will open a store in Manhattan’s Grand Central Terminal on Dec. 9.
The store will have regular hours starting at 7 a.m. Monday through Friday, accommodating commuters. It will open later on weekends.