Dive Brief:

• Dollar General is seeking to expand and diversity its merchandise, including its food offering, according to a report from industry research organization IGD.

• The retailer is holding an "Innovation and Supplier Diversity Summit" in April, gathering together potential new vendors with its buyers and category managers, according to the report. 

• The dollar retailer in December reported a net sales increase of 11% to $5.9 billion in the third quarter and announced plans to build 900 stores, relocate 100 stores and remodel another 1,000 in its fleet. 

Dive Insight:

Nearly three-quarters of Americans live within five miles of a Dollar General store, which number well over 14,000 across the country, more than any other retailer, including Walmart, according to GlobalData Retail.

The dollar store and its rivals are among the few retailers enlarging, rather than shrinking, their physical footprints. Dollar General spun heads last year when it made a promise to build nearly 1,000 new stores.

Its massive footprint helped push the company’s same-store store sales higher in the third quarter — they rose 4.3% amid increases in both customer traffic and average ticket, according to the company’s report. Its mature stores saw their best same-store sales numbers in four years, according to analysts at Gordon Haskett.

The effort to attract new vendors is part of a strategy already in place. The discounter has broadened its assortment in recent months, adding brand-name products, for example. Early signs are that it’s working, and news that the retailer is doubling down will likely please analysts.

A Dollar General spokesperson referred Retail Dive to the company's most recent call with analysts for more information. In December CEO Todd Vasos said a merchandising drive would be part of this year's effort to grab share.

"For 2018 our merchandising initiatives are designed to provide our customers with trusted simple solutions to help to manage their household budget and provide them with even more value," he said, according to a transcript from Seeking Alpha. "We know that our customer looks to us to fill an immediate need, while also providing the opportunity to make purchasing decisions in the aisle that fit within the budget."

The moves begun last year have already helped Dollar General "shift quality perceptions — especially among non-traditional shoppers" and drive up transaction values, Saunders said. In particular, adding more fresh food to some stores "appears to be working well, improving both customer traffic and spending," he also said.  "Rolling fresh out across the bulk of the estate would give Dollar General more of a destination status — although executing this in some of the smaller stores may prove challenging."

The push for new merchandise could also help the retailer as a fierce price war emerges in grocery and competitors take share in higher-margin categories, according to Saunders. The retailer is also contending with costs like wage hikes and occupancy costs that are more enduring than the small spike it saw from a recent acquisition of stores, he warned in previous comments. 

These days, Dollar General is increasingly bested by Walmart on price. In a late September pricing study of dollar stores, Gordon Haskett analysts found that Walmart improved its pricing proposition across competitive sets and now leads Dollar General at the low end. "For the first time since we started this study back in March, our September results show that Walmart is now priced below Dollar General," Gordon Haskett analyst Chuck Grom said in a note emailed to Retail Dive.