Instacart, Dollar General Roll Out No-Markup Delivery to 7,000 Stores

Dollar General customers at 7,000 stores can now order same-day delivery through Instacart without paying a markup on shelf prices, and the program will expand to the discounter's entire 20,000-store footprint this fall.

The no-markup model means customers pay the same price for an item delivered as they would buying it in store. Dollar General CEO Chris Rogers said the economics justify the cost.

"The data is very clear," Rogers said at Groceryshop in Las Vegas. "Customers are gravitating towards value, and online, that often means retailers that don't mark up."

Rogers added that retailers offering delivery without a markup on Instacart are growing 10% faster than those that do not. The approach carries costs for retailers, but losing market share to rivals may cost more, he said.

Dollar General is signaling that delivery is becoming a bigger priority for the discount chain.

"Delivery for us has an opportunity to drive traffic overall," Emily Taylor, COO at Dollar General, said at the Goldman Sachs Global Consumer and Retail Conference earlier this month.

The delivery business contributed 40 basis points to comparable sales growth and brought in more than 1 million new customers, Taylor said. She described the expansion as "early days" for the company's delivery push.

On the first-party side, Dollar General is exploring a subscription model and plans to pilot it before the end of the year. Target already offers no-markup deliveries through a third-party delivery service for Target 360 members.

CEO Todd Vasos underscored the value of delivery customers on a recent earnings call.

"Our delivery platforms are also becoming a more meaningful sales driver as digitally engaged and delivery customers are more than twice as productive as our nondigitally engaged customer," Vasos said.

With full-chain coverage set for this fall and a subscription pilot on the horizon, Dollar General is betting that price parity between shelf and doorstep will keep converting delivery orders into measurable sales growth.