Dollar General quietly builds an entirely new way to serve customers

With more than 21,000 locations spread out across 48 states, Dollar General has the largest physical footprint of any retailer in the country.

The discount retailer’s size is undoubtedly a strength — approximately 75% of the population lives within 5 miles of a location, making it incredibly accessible — but it also creates a challenge.

Managing a chain of that size is no easy feat, with its enormous network of inventory, distribution centers, employees and customers to coordinate. 

In an effort to keep its scale an advantage rather than an operational headache, Dollar General is increasingly turning to AI to keep store shelves full and recommend more relevant bargains to shoppers during store visits.

AI changes how Dollar General runs its stores

At the end of August, Dollar General announced it would be partnering with Relex Solutions to “implement forecasting, replenishment, and allocation capabilities across its North American operations.”

The AI platform will help the retailer handle everything from store replenishment to ordering schedules, supplier management, and fulfillment methods across all 21,000 of its locations.

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“We chose Relex because it gives us a practical way to use AI in our planning and helps our teams focus on the issues that truly need attention,” Jeff Vaughan, SVP Global Inventory Management at Dollar General, said in a statement accompanying the announcement. 

“The platform brings forecasting, replenishment, and allocation planning into a single environment, giving our teams greater visibility across the network,” he continued.

AI is changing what happens inside Dollar General stores

Relex isn’t the only AI platform Dollar General is using in its stores. 

In April, the retailer partnered with QSIC, rolling out an enhanced, AI-enabled in-store audio network across approximately 6,000 of its stores. 

The move was meant to help DG’s brands more meaningfully connect with customers, and to enhance the in-store shopping experience for its millions of regular customers.

“This platform allows us to deliver localized, real-time messaging at scale across the thousands of communities we serve – especially in underserved and often overlooked rural areas,” Austin Leonard, vice president and general manager of DG Media Network, said in a statement accompanying that announcement. 

“It’s a powerful way to create value for our brand partners while enhancing the in-store experience for the millions of customers who rely on Dollar General every day through more relevant, contextual messaging designed to add value, not noise, to their shopping trip,” he continued.

Dollar General has bigger plans for AI

The two partnerships also offer a glimpse into how broad Dollar General’s AI ambitions are becoming.

“While we are still early in our AI journey, we are building agentic operating systems for the enterprise, focused on reshaping and optimizing our workflows to improve productivity throughout the organization,” CEO Todd Vasos told investors during the company’s second-quarter earnings call in late August. 

In other words, Dollar General isn’t just looking to use AI to make its existing processes more efficient. It’s beginning to use the technology to create a retail operation that can respond to what is happening across its enormous network in real time.

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Matt Elsley, CEO of QSIC, which provides Dollar General’s AI-enabled in-store audio technology, described the shift to me this way, “AI platforms are turning the store into a learning loop that gets smarter over time.”

“Digital media has worked this way for years, but physical retail hasn’t, and AI brings that speed and feedback,” he continued. “The bigger shift is in how retailers operate. Today, most retailers without these systems are working in the loop, manually trying to figure out the right strategy to deploy.”

But Elsley argues that bringing AI into physical stores doesn’t just benefit Dollar General, it can also create a better experience for its shoppers.

“Retailers are trying to lift the overall experience, and when that’s done well, it’s the best outcome for both the customer and the retailer,” he told me. “Think about the scale of the problem: these retailers carry tens of thousands of product lines, and Dollar General alone has more than 20,000 stores with an enormous amount of traffic walking through them. Delivering a contextual message to the right customer at the right time genuinely helps people discover things, and if even a small share of those shoppers finds one more useful product, the impact compounds very quickly across a network that size.”

AI could give Dollar General a new advantage

While efficiency may be the retailer’s stated goal for its AI use, the potential payoff extends much further.

As consumers become more budget-conscious, DG is facing increased competition from other value-driven retailers like Walmart, Dollar Tree, Aldi, and others. These chains offer similar deals, assortment, and convenience.

But AI use can give Dollar General an entirely new advantage: making its massive store footprint work harder for every customer who walks through the door.

“Competition from [other discount retailers] makes the traffic already inside Dollar General’s stores even more valuable,” Elsley told me. “Those retailers can fight to win the trip through price and promotions, but once a customer walks into a Dollar General, DG has a short window to help that shopper discover something they may not have planned to buy. AI-enabled audio allows Dollar General to use that moment deliberately, then measure whether the message changed the basket.”

“In a crowded value market, getting more from the store visit you have already won is just as important as chasing the next one,” he continued.

While Dollar General hasn’t specified how AI use has impacted its bottom line, the retailer has seen encouraging growth in both traffic and the average amount customers are spending.

At the close of Q2, net sales increased 5.2% to $11.3 billion, while same-store sales rose 3.5% during the quarter, driven by 2% growth in customer traffic and a 1.5% increase in average basket size.