The retail-store funeral procession keeps growing.
J.C. Penney, Macy’s, Sears, Kmart, Payless ShoeSource, Abercrombie & Fitch, Gander Mountain, hhgregg and more – all have joined the lengthening line of merchants closing brick-and-mortar stores.
But there’s one type of retailer for whom the bell isn’t tolling: Dollar stores – those downscale outlets filled with everything from underwear and laundry detergent to frozen pizza – are thriving.
And Wisconsin appears to be targeted for accelerating growth.
Dollar General, by far the largest of the three major chains in the sector, recently opened a 1 million-square-foot distribution center in Janesville. The development comes as the company plans 1,000 new stores this year alone, pushing its nationwide count to more than 14,000.
That probably will give Dollar General more U.S. locations than McDonald’s. It already has about as many as Starbucks.
Ten years ago, there were just 8,300 Dollar General stores.
The Janesville facility is the firm’s 14th warehouse, but its first north and west of Chicago, providing the company a springboard to supply stores here and throughout the upper Midwest.
Wisconsin and Minnesota, meanwhile, have relatively few Dollar Generals, arguably making the states fertile ground for growth.
“Absolutely,” said Brian Yarbrough, a retail analyst with Edward Jones. “They’re going to be doing a lot more filling in in the upper Midwest markets where they don’t have the penetration versus the Southeast.”
John Feeney, vice president at The Boulder Group, a commercial real estate firm that works with developers of Dollar General locations, agreed.
“It signals some extra expansion in the upper Midwest and the Nebraska-Iowa region,” he said.
How many more of the 7,400-square-foot, discount-convenience stores could Wisconsin see? A look at Dollar General’s state-by-state inventory suggests there is room for significant additions.
As of March, Wisconsin had 133 Dollar General stores, or 2.3 per 100,000 people. Iowa and Indiana had 6.6 and 7.0 stores per 100,000, respectively.
Indiana has a somewhat higher percentage of households bringing in less than $35,000 a year – a consideration for a retailer with a lower-income customer base. But the share of households at that level in Iowa and Wisconsin is the same, 32.4%.
And Wisconsin could absorb another 200 Dollar General stores and still not reach Iowa’s density.
The Tennessee-based company doesn’t talk specifics, but it doesn’t place its warehouses randomly.
“Certainly when we look at where we’re going to add any type of distribution center, we look at current opportunities as well as our future growth,” company spokeswoman Crystal Ghassemi said.
The name notwithstanding, Dollar General isn’t an everything-is-a-buck retailer. Rather, the chain, which is concentrated in the Southeast, emphasizes name-brand and private-label products that people buy regularly, including groceries, toilet paper, soap and pet food.
Such consumables make up more than 75% of Dollar General’s sales, which drives consistency, Yarbrough said. The firm’s performance suffered somewhat in 2016 amid lower food prices and reductions in food-stamp benefits, but still was solid, he said.
Over the past five years, Dollar General’s annual revenue has…