Dollar General sees shoppers cut back spending due to gas prices

Dollar General, which mainly sells items priced under $10, is seeing customers adjust their spending patterns in stores amid elevated gas prices nationwide.

Drivers have faced higher fuel costs since the U.S. and Israel's attack on Iran in late February, which escalated tensions in the Middle East.

Recent American Automobile Association (AAA) data show the current national average gas price is about $4.24 per gallon, compared with $3.13 one year ago.

Against this backdrop, in the first quarter of this year, Dollar General saw its same-store sales increase just 2% year over year, while its operating profit spiked by almost 11%, according to its latest earnings report.

Despite the slight increase in sales, Dollar General has observed customers making sacrifices when shopping for groceries.

Dollar General CFO flags major shift in customer behavior

During an earnings call on June 2, Dollar General Chief Financial Officer Donny Lau said that high gas prices are causing customers to make "trade-offs," including reducing food spending.

"Notably during the quarter, many of our core customers reporting cutting back on other household expenses, including food purchases, due to rising gas prices," said Lau.

Related: Dollar General announces big store change to win back customers

"This pressure has been more pronounced on customers in rural communities as they work to minimize trip distance and make trade-offs in their search for everyday affordability and value," he continued.

This change in behavior aligns with findings from a recent survey conducted by marketing technology company Snipp, which revealed that many Americans are restricting their budgets due to high fuel costs.

Where Americans are cutting corners amid high gas prices:

• Approximately 31% of Americans said gas price increases have significantly or extremely impacted their household budget.
• Roughly 66% have adjusted their overall spending habits as a result.
• About 63.6% of consumers have cut back on dining out, while 44.7% have reduced spending on clothing, 43.2% decreased entertainment purchases, and almost 39% cut travel.
• Nearly 36% said they had reduced grocery spending by trading down or buying less.
• Also, almost 30% of Americans are consolidating grocery trips, and 21.5% are shopping for groceries less frequently.
  
  Source: Snipp

These cuts are surprisingly impacting several grocery categories, Snipp Chief Revenue Officer Chris Cubba said in a statement to The Food Institute.

"What's most surprising is that spending pullbacks are not just confined to discretionary goods and are now extending into essential goods, as well," said Cubba. "While snacks, alcohol, and prepared foods are expected to face the sharpest cuts, pressure is also cascading into produce and dairy."

Dollar General sees a surprising group of customers trade down

Lau said during the call that there have been a "variety of puts and takes on customer budgets" in the first quarter of this year, and that recent changes to SNAP benefits are also affecting Dollar General customers.

"Our core customer continues to be financially constrained, as any benefit from tax benefits was largely offset by higher fuel prices and reductions in SNAP benefit payment," said Lau.

In July 2025, President Donald Trump's "One Big Beautiful Bill" was signed into law, and the legislation includes a decrease in SNAP funding as well as expanded work requirements and eligibility restrictions. These changes are continuing to take effect this year.

Amid recent economic pressures, Lau said Dollar General saw "customers across all income cohorts seek value at increasing rates" during the quarter. However, the company particularly saw higher-income households, those who make more than $100,000 annually, trading down the most.

"What we're seeing, though, is we are seeing an accelerated rate of trade-in," said Lau. "While all cohorts are trading in, we're seeing that the upper end is trading in the most. We're seeing that as well. Reminder, that's the 100K-plus cohort that's trading in."

"I believe that the pressures that had persisted prior to fuel costs, so sustained inflation, and now those elevated fuel costs, and we've always said that when that price hits that $4 mark, and then crosses it, and then sustains for a while, you start to see that trade-in come in, and you start to see that our core customer needs us most," he added.

Dollar General bets big on pricing and delivery to win shoppers

As Dollar General navigates a more cautious consumer, it is betting big on its $1 price point, which saw increased demand during the first quarter.

"We continue to emphasize and strengthen our Value Valley offering, which is comprised of more than 500 rotating items, all at $1," said Lau. "Of note, this offering once again outperformed the chain average in Q1 (the first quarter) with a comp sales increase of 18.4%, driven by broad-based performance across many sections and exceptional performance in health and beauty."

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The company has recently rolled out new $1 items in its stores and will continue to do so to keep customers engaged.

"We also introduced several new $1 private label items during the quarter, as well as a new frozen section, which now features a full door dedicated to new frozen items at the $1 price point," said Lau. "We believe this price point continues to be important to our customers and are excited about the opportunity to continue providing tremendous value through these offerings."

Dollar General also plans to double down on convenience by opening 450 new stores this year. Additionally, it is expanding its delivery options to customers.

"We continue to grow the reach of our delivery options available to customers and are now delivering from approximately 18,000 stores with our own myDG delivery offering, as well as through third-party partners, DoorDash and Uber Eats," said Lau.

He said that during the quarter, more than 80% of online customer orders were delivered in 1 hour or less, with approximately half delivered in under 30 minutes. The company estimates that roughly 0.70% of its 2% comparable sales growth during the quarter consisted of online orders.

To capitalize on this momentum, Dollar General is planning to pilot a delivery subscription program later this year.

As the company invests in its $1 pricing and delivery strategies to attract and retain customers, it expects its net sales to increase by 3.7% to 4.2% during fiscal year 2026.

Related: BJ's Wholesale plans major store changes as customers pull back

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This story was originally published June 4, 2026 at 11:33 AM.