No. of Recommendations: 6
Thanks for the comments, rivervalley, and the thoughtful questions.
I agree the issues raised are important, and have similarly been trying to find better granular data on the exact rural v non-rural makeup of DG stores. The annual report mentions that more than 80% of stores are in towns with less than 20, 000 people, but that's a pretty broad brush (I believe it used to be 75%, so it appears they've been growing, not shrinking, that focus on smaller population centers) -- I think they key question is how many DGs operate in conditions where a WMT or similar isn't feasible, and WMTs can operate in towns decently smaller than 20k. So how much of that 80% is contained in non-WMT geographical areas? And, ideally, how many of those locations don't have a nearby FDO/DLTR store?
I haven't found what I'm looking for yet, and I don't think DG has straightforwardly provided the data. One recent claim I've found is by Mostly Borrowed Ideas / Abdullah Al-Rezwan, namely that the number of DG stores that are 5 miles or greater from the closest Wal-Mart may be as high as close to half:
https://twitter.com/borrowed_ideas/status/17062934...The analysis is in his "Deep Dive" on DG, but I'm not a paid subscriber, so I'm not sure how he arrives at that figure.
On the issue of population decline, I haven't had a close look yet. This other, longer Kenneth Johnson piece puts things into a wider perspective:
https://carsey.unh.edu/publication-rural-america-l....
It seems to me that the population numbers today and in the next 5-10 years are unlikely to be too different, in absolute terms (as opposed to as a share of total population), as compared to the period of time (e.g., 2009-2022) wherein DG was achieving exceptional results. Though that may be true for some regions (e.g., the South) more than others (the Midwest), as rural population declines have been uneven. Perhaps I'm underestimating the possibility of rapid decline.
All that said, I don't really have a good answer myself, and there has been a troubling trend of same store sales weakness as of late. I suspect it's a mix of labour (anecdotally I've seen several reports of unscheduled store closures due to staffing issues, and it doesn't take much to veer of trend if this is a new issue), supply chain, and other structural issues (e.g., newer stores tend to grow in sales in their first 4-5 years, so one would expect DG's aggregate same store sales to stall in growth as their % of mature stores becomes a greater portion of their total footprint), as opposed to demographic changes, but I'd be curious to see a systematic look at the issue.
