Dollar General is eyeing a bigger presence in healthcare

In what could be a competitive shot across the nose for pharmacies, Dollar General has formed a committee to explore ways to expand its healthcare offerings.

The discount giant said yesterday that it has created a Healthcare Advisory Panel, a body of subject matter experts in the healthcare industry who will serve as “thought partners” and strategists to help Dollar General develop its strategy and invest best its resources in the health and wellness arena.

Last July, Dollar General unveiled plans to grow its healthcare business to meet more customer needs and establish itself as a healthcare destination. The effort includes an increased assortment of cough and cold, dental, nutritional, medical, health aids and feminine hygiene products in many Dollar General stores.

Additionally, Dollar General hired Dr. Albert Wu from McKinsey & Co. for the newly created position of Vice President and Chief Medical Officer. In his role, Wu is charged with establishing and strengthening relationships with healthcare product and service providers to “build a comprehensive network of affordable services for DG’s customers,” according to Dollar General. The retailer noted at the time that 75 percent of the U.S. population lives within five miles of a Dollar General store, providing unique access to rural and other communities that are often underserved in the current health care ecosystem.

“Dollar General is excited to take these next bold steps in our healthcare and welcomes these talented and respected professionals to our new advisory panel,” Wu said in a statement Thursday. “Believing in furthering our mission of Serving Others, the group will provide guidance and prioritization of health and wellness efforts at DG. We are proud to have a diversity of perspectives and experiences represented on the panel, which helps us better understand our customers and provide meaningful solutions to complex healthcare problems.”

Dollar General

Dollar General also aims to establish itself as a health and wellness destination by offering fresh produce, now in more than 2,300 locations, in more stores.

The following experts join Wu on the Healthcare Advisory Panel, Dollar General said:

• Dr. Patrick Carroll, a physician leader with experience in retail healthcare, managed care and integrated delivery networks. He currently serves as Chief Medical Officer of Vida Health and previously held Chief Medical Officer roles at Walgreens, Hims & Hers and Hartford Healthcare. His responsibilities include oversight of strategic initiatives, clinical and quality programs, and relationships with provider groups.

• Dr. Kathy Lantz, healthcare executive and entrepreneur with 20 years of experience designing, implementing and scaling care delivery models. She now serves as chief strategy and product officer at Personal Care Medical Associates and is a national board director for the National Hospice and Palliative Care Organization. She was previously Chief Clinical Officer at Aspire Health, which was acquired by Anthem in 2018.

• Dr. Von Nguyen, a physician, population health expert, and public health leader with a track record of building successful inter-organizational collaborations to improve population health and well-being. He is currently the Clinical Lead of Public and Population Health at Google. Nguyen previously served as chief medical officer and senior vice president at Blue Cross and Blue Shield of North Carolina and held roles of increasing responsibility in policy and strategy at the Centers for Disease Control and Prevention.

• Dr. Yolanda Hill Wimberly, a visionary and leader who established a presence on the national health scene based on her organizational skills and development of responsive clinical organizations and educational programs. A board-certified physician in pediatrics and adolescent medicine, Wimberly is senior vice president and chief health equity officer at Grady Health Systems, responsible for leading Grady Health System’s strategic direction on health equity. She also serves as a professor of pediatrics at the Morehouse School of Medicine.

Given Dollar General’s huge store footprint, convenient small format and low prices, the chain’s plans to expand its health products business and develop health services pose a major competitive challenge for drugstores, according to Jefferies analysts Corey Tarlow and Randall Connick .

“Management has repeatedly referred to the drug channel as one of the biggest stock donors to DG. Importantly, DG already has an expanded healthcare offering in 1,800 stores as of Q1, with plans to reach over 4,000 stores by the end of the year,” Tarlow and Connick wrote in a research note yesterday. “This expanded healthcare offering includes up to 30% more retail space and up to 400 more items than DG’s standard offering. Meanwhile, DG has a significant price advantage, 40% cheaper than pharmacies.”

Goodlettsville, Tennessee-based Dollar General currently operates 18,356 stores in 47 states. For fiscal 2022, the retailer plans to open 1,110 new stores and complete 1,750 renovations and 120 relocations.

“We expect approximately 800 of our new stores in 2022 to be in our larger 8,500-square-foot store as we respond to our customers’ desire for an even wider selection of products,” said Chief Operating Officer Jeff Owen on a conference call with analysts about first-quarter results. “With approximately 1,200 square feet of additional retail space compared to a traditional store, these larger formats allow for an expanded number of high-capacity coolers, an extended queue line and a wider product assortment, including NCI [non-consumables initiative]our larger offer of health and beauty and multi-store products.”

Owen — appointed earlier this month to succeed Todd Vassos as CEO — also told analysts that Dollar General had fresh produce in more than 2,300 stores at the end of the first quarter and plans to expand to more than 3,000 stores by end of 2022

“DG is all about convenience and value, finding ways to help underserved rural communities. Along these lines, the company is constantly looking to improve its offering, including adding other items in the box such as produce and NCI,” Tarlow and Connick wrote in their report. “We view DG’s continued expansion into health and wellness as a way to provide additional value to its customers as other big-box discounters (Walmart, Costco, etc.) have services such as optical and pharmacy. We believe the continued upgrade of DG’s health and wellness offering is likely to drive incremental gains over competitors and improve store performance going forward.”

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