Discount retailer Dollar General
has strong ambitions to win over more high-end consumers by opening new “Popshelf” stores aimed at suburban shoppers. This shopping concept will offer seasonal and home décor, health and beauty must-haves, along with 95% of the items being be priced at $5 or less. As Dollar General wades deeper into the suburbs where 39% of African Americans live, just how valuable will the Black dollar become for the company’s bottom line?

The Breakdown You Need To Know: Dollar General’s initial targeted customers are primarily going to be women who are located in diverse suburban communities, with a total household annual income ranging from $50,000 to $125,000. CultureBanx noted that typically the low-cost chain has largely catered to customers on a tight budget to shop at the company’s more than 16,000 stores. Right now their average shopper comes from a household that earns $40,000 or less per year. In 2017, the U.S. Census Bureau released data showing the median income for an African American household was $39,490, putting them right in the Dollar General consumer sweet spot. 

The suburbs have become increasingly more diverse, with 39% of African Americans calling the area home in 2014, according to the Brookings Institute. That’s a noticeable shift from 2000, when only 33% of African Americans lived in the suburbs, and exactly why they should be on Dollar General’s radar. Not to mention the $1.4 trillion dollars in spending power that they possessed in 2019, which is expected to grow to $1.8 trillion by 2024, according to the Selig Center for Economic Growth.

Discounts = Dollars: So far the discount chain’s same store sales increased 18.8% during the second quarter of this year. To keep sales going with its new Popshelf concept tapping into diverse suburbs will be key. The company’s stock has gained about 40% so far this year, bringing its market cap to more than $54 billion.

Prior to tapping into the suburban maret, Dollar General had been attempting to fill food desert voids in many communities. They originally saw targeting food deserts, areas not served by supermarkets or nearby grocers as its next great growth opportunity. 

The U.S. Department of Agriculture reported that 23.5 million Americans live in food deserts. As defined by the department, food deserts are low-income communities with limited food access, where residents lack a 1-mile radius to the closest full-service supermarket. 

General Black Dollars: Additionally, Dollar General wanted to make sure its consumers were mellowed out by selling cannabidiol (CBD) cosmetic products in more than 1,000 stores across Tennessee and Kentucky. Its CBD assortment is limited to topical cosmetic products, including bath bombs, bath salts and face masks, and African Americans specifically spend hundreds of millions of dollars in the cosmetics consumables space

If we look at the power of the black dollar across these consumables, African Americans spend nearly $54 million a year in the ethnic hair and beauty space. When it comes to the broader market in personal appearance products, such as grooming aids and skin care preparations, black shoppers spent $127 million and $465 million respectively, according to Nielsen. So there are several reasons the Black dollar is extremely important to Dollar General, even in the suburbs.

What’s Next: Even before the recession, the discount retailer was growing rapidly and this next phase of suburban growth should be just as strong. Dollar General’s first two Popshelf locations will open near Nashville this fall with the company expecting to open another 30 locations by the end of fiscal year 2021.