Dollar General Corporation (DG): Business Model Canvas [Dec-2025 Updated]

You're digging into the engine room of the discount retail giant, trying to map out exactly how they are funding their aggressive expansion-planning over 4,800 projects in FY2025-while staying true to their core value proposition of everyday low prices, with over 2,000 items at or below $1. As a former head analyst, I can tell you the model hinges on capturing the budget-conscious shopper across their nearly 21,000 small-box locations, where Consumables alone drove $8 billion in Q1 2025 sales; see the full nine-block breakdown below to understand the key activities and cost structure supporting this massive footprint. (I defintely think this is the clearest way to see it.)

Dollar General Corporation (DG) - Canvas Business Model: Key Partnerships

You're looking at how Dollar General Corporation structures its external relationships to fuel its growth and service delivery, which is critical given the current consumer spending backdrop.

The last-mile logistics network relies heavily on external delivery platforms. Dollar General Corporation has scaled this offering significantly throughout 2025.

• DoorDash partnership initiated with a pilot in about 400 locations, with an initial goal to reach 10,000 stores by the end of 2025.
• Uber Eats was added to expand delivery, bringing over 14,000 Dollar General and pOpshelf locations onto the Uber Eats platform.
• Collectively, these delivery options are now available in more than 17,000 stores.
• Delivery orders are showing larger basket sizes than the average in-store transaction and a very strong repeat visit rate.

The product assortment is a mix of national brands and a growing private label portfolio, which requires deep ties with third-party suppliers.

• More than half of Dollar General Corporation's customer baskets contain at least one private label item.
• The largest private brand, Clover Valley, generated retail sales of $2.3 billion in fiscal 2023.
• The company currently sells over 3,200 consumable private brand products.

Securing prime, small-box locations is a constant negotiation with real estate developers and landowners. This is a core driver of their expansion strategy.

Dollar General Corporation reaffirmed plans to execute nearly 4,885 real estate projects in 2025. The management outlook suggests roughly 450-575 new stores annually over the next two years. Many of these new locations are expected to be in an 8,500 square foot format, predominantly in rural communities.

Strategic brand collaborations, like the Dolly Parton Spring 2025 collection, are used to drive excitement and traffic to the physical and digital channels.

Financial services partners are essential for digital order integration, ensuring customers can use benefits like SNAP/EBT for their online purchases.

Here's a look at the scale of the operation and recent financial performance that underpins these partnership investments:

Dollar General Corporation (DG) - Canvas Business Model: Key Activities

You're looking at the core actions Dollar General Corporation (DG) is driving right now to keep that growth engine turning, especially as the consumer remains cautious. It's all about disciplined physical expansion, operational excellence in the back end, and pushing digital adoption.

Aggressive Real Estate Expansion and Store Remodels

The commitment to physical footprint expansion remains high, though the focus is shifting toward refreshing existing assets. For the fiscal year ending January 30, 2026, Dollar General Corporation plans to execute approximately 4,885 real estate projects. This is a significant undertaking, showing they still see room to capture market share, particularly in rural areas where 80% of their stores serve communities of 20,000 people or fewer. The CEO noted that the slowdown in new store rollouts compared to 2024 is driven by higher new-store occupancy and operating costs, so the balance is shifting toward remodels.

Here's the quick math on the planned 2025 real estate activity:

The remodel strategy is central, with both Project Renovate and Project Elevate expected to deliver strong returns. While the user prompt mentioned a 3% to 5% lift, the latest data shows Project Elevate remodels are on track for an average first-year annualized sales comp lift of approximately 3%. Project Renovate stores are expected to yield a higher comp sales lift of approximately 6% in their first year. Still, these upgrades are seen as a key component to enhancing the customer experience and driving incremental sales growth.

Managing a Complex, High-Volume Supply Chain and Distribution Network

To support this massive footprint, managing the flow of goods is a critical, ongoing activity. Dollar General Corporation is actively streamlining its supply chain to better manage inventory across its more than 20,000 U.S. stores. A key part of this is getting inventory to the shelf faster, which involves restructuring the distribution network and warehouse sorting processes. To combat theft and shrinkage, the company is dropping 1,000 high-shrink items from its assortment this year. Furthermore, the company has been actively optimizing its physical distribution footprint, having recently closed seven warehouses and planning to shut down five more to cut costs and improve inventory flow. This focus on efficiency is showing results; in the first quarter, inventory per store dropped 9.5% year-over-year.

Inventory Management and Shrink Mitigation to Improve Gross Margin

The efforts in the supply chain directly feed into margin performance. For the third quarter of 2025, the Gross Profit Margin reached 29.9% of net sales, a notable increase of 107 basis points from 28.8% in Q3 2024. This improvement was driven primarily by higher inventory markups and lower shrink. In Q3 2025 specifically, the company delivered a 90 basis point improvement in shrink versus the prior year. This focus on inventory control is a gift that keeps on giving, as management noted. As of October 31, 2025, total merchandise inventories were $6.7 billion, marking a decrease of 8.2% on an average per-store basis compared to the prior year's $7.1 billion. Year-to-date through Q3, inventory was decreased by $465 million or 6.5% compared to the prior year.

Digital Platform Development for DG Delivery and DG Media Network

The company views its digital engagement as still being in the "second inning," meaning there is significant runway for growth. The focus here is on making shopping more convenient and creating new revenue streams through retail media.

• Delivery partnerships, including with DoorDash, now service more than 18,000 stores, driving incrementality and larger basket sizes than in-store transactions.
• The DG Media Network is seeing double-digit digital advertising growth in 2025, signaling rising revenue potential from retail media partnerships.
• Digitally engaged customers spend 3.6 times more than a non-engaged customer.
• 70% of digitally engaged customers visit a physical store within 14 days of that engagement.

These digital activities are designed to complement the physical store base, using the vast real estate footprint to offer rapid fulfillment options, so you see the digital strategy as an extension of the store, not a replacement.

Dollar General Corporation (DG) - Canvas Business Model: Key Resources

You're looking at the core assets that let Dollar General Corporation operate and expand, so let's break down the hard numbers behind their scale as of late 2025.

The physical footprint is massive, giving them an unparalleled advantage in reaching the value-conscious consumer in their neighborhoods. As of the end of the third quarter of fiscal year 2025, Dollar General Corporation operated 20,901 stores across the US. This network is the engine for their everyday low prices (EDLP) value proposition, which is further cemented by strong brand equity evidenced by their recent financial momentum, like the 43.8% jump in diluted Earnings Per Share (EPS) year-over-year for the third quarter of 2025.

The supply chain infrastructure is a critical, proprietary asset that keeps those shelves stocked efficiently. This includes significant recent investment, such as the new distribution center in North Little Rock, Arkansas, which was a $140M project that opened on February 22, 2025. This focus on logistics is ongoing; for the 39-week period ending October 31, 2025, total additions to property and equipment for distribution and transportation-related projects reached $192 million.

Financial strength directly fuels this expansion and operational stability. For the year-to-date period through the third quarter of 2025, cash flow from operations reached $2.8 billion. This robust cash generation supports their aggressive real estate strategy, with capital expenditures for the full fiscal year 2025 anticipated toward the lower end of the $1.3 billion to $1.4 billion range.

Supporting this vast operation requires a substantial workforce. Dollar General Corporation had 194,200 employees in fiscal year 2025, representing a 4.52% increase from the prior year. The specific count as of the third quarter of 2025 was reported at 195,000 employees.

Here's a quick look at the scale of these key physical and human resources:

• Store Count (as of Q3 2025): 20,901 locations.
• Employees (FY 2025): 194,200.
• New DC Investment: $140 million.
• YTD Cash Flow from Operations (through Q3 2025): $2.8 billion.
• Total Distribution/Transportation CapEx (39 weeks FY2025): $192 million.

You can see the scale of their recent capital deployment in logistics versus store improvements:

Dollar General Corporation (DG) - Canvas Business Model: Value Propositions

You're looking at the core reasons why customers choose Dollar General Corporation over other options, especially when budgets are tight. It's all about accessibility and price, grounded in real-world numbers.

Extreme convenience for daily needs in rural, underserved communities

Dollar General Corporation's primary value is its proximity to customers who lack easy access to traditional large-format retailers. This is evident in their physical footprint.

• Operates over 20,000 stores across rural America.
• Reported 20,901 locations at the end of the third quarter of fiscal 2025.
• Plans to open approximately 450 new stores in the U.S. in fiscal 2026.
• Maintains a presence across 48 states and in Mexico.

Everyday low prices, maintaining a 3-4% price gap below mass retailers

The pricing strategy is a direct response to the value-seeking consumer, a cornerstone of the Dollar General Corporation value proposition.

• Maintains a price gap of three to four percentage points on average below mass retailers.
• Announced price cuts on approximately 40 percent of products in select departments earlier in 2025.
• The 'Value Valley' offering, featuring about 500 rotating SKUs at the $1 price point, generated comparable sales growth of 7.6% in Q3 2025.

Wide assortment of consumables and general merchandise in one quick stop

The store mix balances high-frequency consumables with higher-margin general merchandise, creating a one-stop shop for essentials.

Here's a look at the sales breakdown from Q3 2025, showing the balance:

The gross profit margin improved from 29.9% in 2024 to 30.7% in Q3 2025, reflecting effective cost management supporting these price points.

Commitment to over 2,000 SKUs priced at or below $1

This commitment reinforces the everyday low-price promise, with a significant portion of the inventory dedicated to the dollar price point.

• Continues to see a substantial offering of more than 2,000 SKUs at or below the $1 price point.

Digital ordering and delivery options for a modern, convenient experience

Dollar General Corporation is expanding convenience beyond the physical store footprint through digital channels.

• Delivery partnerships now cover 18,000 stores.
• DG Delivery is available through the app and website in more than 17,000 stores as of Q3 2025.
• Online sales for October 2025 reached $14,328,287.
• Digital Commerce 360 projects online sales for the full year 2025 will reach $97.25 million.
• The DG Media Network saw retail media volume grow more than 25% in Q1 2025 compared to Q1 2024.

Digital engagement is still considered to be in the "second inning" of its journey, suggesting future growth potential. Finance: draft 13-week cash view by Friday.

Dollar General Corporation (DG) - Canvas Business Model: Customer Relationships

You're looking at how Dollar General Corporation (DG) keeps its customers coming back, which, honestly, boils down to value and convenience, especially when budgets are tight. The core relationship is transactional, built on the promise of low prices and getting in and out fast. For instance, the company maintains a commitment to keeping more than 2,000 items priced at or below $1. This focus on the everyday low price (EDLP) strategy supports their robust third-quarter performance, where net sales hit $10.65 billion. Same-store sales growth for that third quarter was 2.5%, and the fiscal 2025 projection remains in the 2.5% to 2.7% range for same-store sales. That's the foundation of the relationship; they are the go-to for essentials when every dollar counts.

Digital engagement is where Dollar General Corporation is definitely still growing-the CEO even said their digital journey is only in the "second inning." The DG app and website are central to this, as they power delivery partnerships that now cover over 18,000 stores through DoorDash, and an in-house same-day service is active in 3,000-plus locations. Interestingly, these digital delivery partnerships are driving larger basket sizes than typical in-store transactions. The DG Media Network, their retail media arm, is a key part of this digital relationship, seeing double-digit digital advertising growth in 2025 and growing retail media volume more than 25% in Q1 compared to Q1 of 2024. Digital Commerce 360 projects their online sales for 2025 to reach $97.25 million.

The loyalty program centers heavily on digital coupons and personalized offers delivered through the myDG app. Registered myDG users are told they can save between $300 and $500 each week by combining these digital coupons with in-store deals. To keep the process efficient, there are rules you need to follow, like you can only use five coupons per trip. Also, you're limited to only one Dollar General Digital Coupon Account per person. The structure is designed to drive frequency and basket mix, even if the average basket size was flat in Q3 2025, as customers shopped more often but spent less per visit.

In-store customer service focuses on keeping things basic and efficient, which aligns with the speed-of-service promise. The customer traffic in Q3 2025 was strong, increasing by 2.5%. The company operates 20,901 U.S. locations as of the end of Q3 2025, and they opened 196 new stores in that quarter alone. Remodeling efforts, like Project Elevate, are aimed at mature stores, with a goal of achieving first-year annualized comparable sales lifts ranging from 3% to 5% for those locations. It's all about making the necessary transaction quick and painless; if onboarding takes 14+ days, churn risk rises, even for a discount retailer.

Direct communication is primarily managed through digital channels for the weekly circulars and promotions, which supports the coupon strategy. While I don't have the exact email open rates or subscriber counts for late 2025, the emphasis on digital coupons and weekly promotions delivered via the app and website clearly points to email as a supporting channel for driving traffic to these digital savings. The company is definitely pushing customers to the app to see these deals.

Here's a quick look at some key operational and digital metrics that define these customer relationships as of late 2025:

You can see the push to digitize is happening, but the bulk of the relationship defintely still happens at the physical counter. Finance: draft 13-week cash view by Friday.

Dollar General Corporation (DG) - Canvas Business Model: Channels

You're looking at how Dollar General Corporation (DG) gets its value proposition to the customer base as of late 2025. It's a mix of heavy physical presence and growing digital integration.

Physical retail stores: nearly 21,000 locations in the US and Mexico. This massive footprint is the core delivery mechanism for the majority of transactions.

The digital channels complement this physical network:

• E-commerce platform: DG app and website for digital coupons and ordering. The mobile app is described as engaging and popular with customers.
• Same-day delivery via DoorDash and Uber Eats from over 17,000 stores. This service has led to larger basket sizes than the average in-store transaction and a very strong repeat visit rate from delivery customers.
• In-store pickup for online orders (Buy Online, Pickup In Store).
• Weekly print and digital circulars for promotional communication.

Here's a quick look at the digital channel performance metrics we have for 2025:

To be fair, the overall company revenue guidance for Fiscal Year 2025 is set between $42.5 billion and $42.6 billion, so the e-commerce portion is still a small fraction of the total, but it is growing its reach. The delivery service sees more than 75% of its orders delivered in 1 hour or less. Finance: draft 13-week cash view by Friday.

Dollar General Corporation (DG) - Canvas Business Model: Customer Segments

You're looking at the people Dollar General Corporation serves, and honestly, it's a broad spectrum, but with a very clear center of gravity. The company has built its entire footprint around serving communities where convenience and price are king.

Core low-to-middle-income, budget-conscious households define the base. This primary customer group typically earns under $35,000 annually. When these core shoppers feel financial pressure, the data shows they come in more often but buy less per trip; store traffic rose 2.5% in the latest quarter while the average transaction amount was flat. It's a sign of reliance, not necessarily increased spending power. Still, in 2024, a significant 60% of U.S. households shopped at Dollar General Corporation.

The geographic focus is perhaps the most defining characteristic of this segment. Dollar General Corporation is uniquely positioned to serve an underserved customer in rural America. Looking ahead to 2026, the CEO noted that approximately 80% of the current store base serves towns of 20,000 or fewer people. As of October 19, 2025, the company operated 20,388 U.S. stores, reaching about 75% of the U.S. population within a five-mile radius.

It's not just the lowest earners anymore, though. Economic conditions are pushing a more diverse group into the stores. We're seeing increased 'trade in' activity from both middle and higher-income customers who are looking to maximize value. This 'trade down' trend has broadened the appeal, even as the core customer remains financially constrained.

Government assistance users are a critical, high-frequency segment. This demographic represents about 25% of Dollar General Corporation's customer base. Households receiving Supplemental Nutrition Assistance Program (SNAP) benefits spend 32% more per person compared to non-SNAP consumers. Furthermore, these SNAP shoppers make 22% more trips to the store than non-SNAP households. In May 2025, 41.7 million people in the U.S. were receiving SNAP benefits.

Finally, the need for quick, local trips drives a lot of the daily traffic. This is supported by the product mix, where consumables-like packaged foods, cleaning products, and health/beauty items-accounted for 82.86% of net sales for the 13 weeks ended October 31, 2025. The convenience factor is key, especially with fresh produce now available in 7,000 stores.

Here's a quick look at some key metrics defining these segments:

You can see the reliance on the core customer through the frequency data, but the growth in higher-income shoppers shows the value proposition is working across the board. The company's physical footprint directly serves the rural and small-town mandate.

• Core customers visit more often but have smaller basket sizes.
• SNAP households make 22% more store trips than non-SNAP households.
• Fresh produce is stocked in 7,000 locations.
• Texas leads in store count with 1,885 locations (9% of total).
• The company plans 450 new U.S. store openings in 2026.

Finance: draft 13-week cash view by Friday.

Dollar General Corporation (DG) - Canvas Business Model: Cost Structure

The Cost Structure for Dollar General Corporation is heavily weighted toward the cost of the goods it sells and the operational expenses required to support its vast store footprint. You see this reflected in the primary cost drivers that eat into the revenue Dollar General Corporation brings in.

Merchandise costs (Cost of Goods Sold) are the single largest expense driver, as is typical for a retailer. Based on Q3 2025 results, the Gross Profit Rate was 29.9% of net sales. This means that the Cost of Goods Sold (COGS) represented approximately 70.1% of net sales for that period, making it the dominant cost component.

The company maintains a significant operating cost base due to its scale. These costs are captured largely within Selling, General, and Administrative (SG&A) expenses. For the third quarter of 2025, SG&A expenses were reported at 25.9% of net sales.

Key components driving the SG&A percentage higher in Q3 2025 included specific operating costs:

• Incentive compensation
• Repairs and maintenance
• Utilities

The sheer scale of the workforce is a major fixed and variable cost. Dollar General Corporation employed over 195,000 employees as of Q3 2025. The fiscal year 2025 total employee count was reported as 194,200. Labor costs, including the mentioned incentive compensation, are a critical element of managing this large team.

Investment in the physical footprint drives high capital expenditures. Dollar General Corporation expects its total capital expenditures for fiscal year 2025 to be toward the lower end of the range of $1.3 billion to $1.4 billion. This spending fuels expansion and maintenance of the existing fleet.

Here's a breakdown of the capital allocation for the 39-week period ended October 31, 2025, which totaled $1.0 billion:

To manage the flow of goods that make up the largest cost, Dollar General Corporation is actively managing inventory levels. Merchandise Inventories, at cost, as of October 31, 2025, stood at $6.7 billion. This represented an 8.2% decrease compared to November 1, 2024.

Dollar General Corporation (DG) - Canvas Business Model: Revenue Streams

Dollar General Corporation (DG) generates revenue primarily through the sale of goods across its extensive physical store footprint, supplemented by growing digital and media initiatives. The core of the business is built on high-volume, low-price retail transactions.

The primary revenue driver remains the sale of everyday necessities.

• Primary: Sales of Consumables drove $8 billion in Q1 2025 sales.
• Sales of Non-Consumables include Seasonal, Home Products, and Apparel.

Here's a quick look at the category breakdown from the first quarter of fiscal 2025:

The overall financial outlook for the full fiscal year 2025 reflects continued, albeit moderated, top-line expansion. Dollar General Corporation projects full fiscal year 2025 net sales growth to be in the range of 4.7% to 4.9%. This follows a reported net sales figure of $10.6 billion in the third quarter of 2025 alone.

Ancillary revenue streams are becoming an increasingly important, high-margin component of the overall revenue mix. The DG Media Network retail media platform is a key focus area for this growth. Management noted that the DG Media Network grew retail media volume more than 25% in Q1 2025 compared to Q1 2024, and the digital advertising business is seeing double-digit growth in 2025.

Digital services also contribute, though as a smaller portion of total revenue. This includes revenue generated from delivery fees and other digital offerings. For instance, the partnership with DoorDash now services more than 18,000 stores, expanding the reach of same-day delivery options. Digital Commerce 360 projects Dollar General Corporation's online sales for 2025 will reach $97.25 million.

You should track these non-traditional revenue streams as they often carry a higher gross margin profile than physical product sales, which helps offset the lower margin associated with the high volume of consumables.