Daily Insights

The Digital Underdog

By: Alizah Asif Farooqi | May 17, 2019

Dollar General is elbowing its way into the digital world. The discount grocer has a new app, DG GO!, stocked up with all the digital dressings. Here’s how the move could mean fresh success for the dollar underdog, despite a swarm of billion-dollar players.

Everyone has a smartphone, right? Not so. In fact, many of Dollar General’s customers, who typically earn more than $20,000 below the national average, didn’t use one until recently—explaining why the grocer hasn’t grabbed on to digital as fast as others in the industry. Now, the popularity of phones has given Dollar General a new and hand-held way to pick up the pace in digital and engage with its customers.

Though the company already has an online business, it’s tough to take in a profit when the average Dollar General shopper spends less than $12 per trip. The new app allows customers to buy online and pick up in-store, scan bar codes on products while they shop and keep a running total of their receipts, skip the line to go to self-checkout, and scope out new opportunities to save through the cart calculator feature. Dollar General has even stepped up its in-store WiFi to aid use of the app.

But the odds are certainly not stacked in Dollar General’s favor. Compared to the many digital alpha dogs like Kroger and Costco that have paired with grocery couriers like Instacart, Dollar General’s new services don’t look like much. And Instacart has not slowed its pace of expansion, launching in eight more states since premiering to cover the country and double its location count, according to Gartner L2’s Digital IQ Index: Grocery. While Amazon Prime Now’s delivery range has also expanded in recent months, it still falls far behind Instacart in monthly active iOS app users, indicating the strength of the eager upstart’s other partnerships in the wake of Amazon’s Whole Foods withdrawal. As such, Instacart is the leading courier service for grocers, even in the face of perpetually ravenous Amazon.

Still, a partnership with Instacart isn’t all perks for the consumer. Costco and BJ’s, for example, do not allow customers to log into Instacart with their site accounts and both also prevent them from earning loyalty points from Instacart purchases, potentially reducing loyalty to the grocery retailers. For shoppers who do choose to shop on Instacart, it remains a competitive space for grocers to push out their preferred assortment. As such, an efficient app could solidify the existing loyalty that Dollar General has with its consumers, particularly through the appeal of savings, step up its tech game, and drive more in-store traffic at the same time—especially since Dollar General has more than 15,400 stores in the United States, a bigger footprint than Walmart, Kroger, Target, and Costco combined.

Even without digital flash, Dollar General has maintained an average ranking over the past two years in Gartner L2’s indexes, with specific success and high impressions garnered from desktop display ads that promote specials and family savings. That said, if the brand continues to focus on discounts, digital can simply serve as a well-oiled vehicle to push them out. Perhaps it’s the year of the underdog for grocers—Feeble label Trader Joe’s just produced a digital asset of its own. So even though its no-frills approach and decadent discounts may give Dollar General a humble appearance, it’s this humility that’s gotten it far in the past and could push it forward in the future.