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In what could be a competitive shot across the bow for drugstores, Dollar General has formed a committee to explore ways to expand its health care offerings.

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

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

In addition, Dollar General hired Dr. Albert Wu from McKinsey & Co. for the newly created post of vice president and chief medical officer. In the role, Wu is charged with establishing and bolstering relationships with health care product and service providers to “build a comprehensive network of affordable services for DG customers,” according to Dollar General. The retailer noted at the time that 75% of the U.S. population lives within about five miles from a Dollar General store, providing unique access to rural and other communities often underserved in the current health care ecosystem.

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

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Dollar General, too, aims to establish itself as a health and well-being destination by rolling out fresh produce, now in over 2,300 locations, to more stores.

Joining Wu on the Healthcare Advisory Panel, Dollar General said, are the following experts:

• Dr. Patrick Carroll, a physician leader with experience across retail health, managed care and integrated delivery networks. He currently serves as chief medical officer of Vida Health and formerly held roles as chief medical officer at Walgreens, Hims & Hers and Hartford Healthcare. His responsibilities have included overseeing strategic initiatives, clinical and quality programs, and provider groups relationships.

• Dr. Katy Lanz, a health care executive and entrepreneur with 20 years of experience in 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 previously served as chief clinical officer at Aspire Health, acquired by Anthem in 2018.

• Dr. Von Nguyen, a physician, population health expert and public health leader with experience in building successful collaborations across organizations to improve the health and well-being of populations. He currently is clinical lead of public and population health at Google. Before that, Nguyen 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 has created a presence on the national health care 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 the strategic direction of Grady Health System in health equity. She also serves as professor of pediatrics at the Morehouse School of Medicine.

Given Dollar General’s huge store footprint, convenient small format and low pricing, the chain’s plans to ramp up its health products business and develop health care services raise a big competitive challenge for drugstores, according to Jefferies analysts Corey Tarlowe and Randal Konik.

“Management has repeatedly called out the drug channel as one of DG’s largest share donors. Importantly, DG now has an expanded health care offering in 1,800 stores as of 1Q, with plans to hit 4,000-plus stores by year-end,” Tarlowe and Konik wrote in a research note yesterday. “This expanded health care offering features up to 30% more selling space and up to 400 more items than DG’s standard offering. Meanwhile, DG has a notable advantage with prices, 40% cheaper than drug stores.”

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

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

Owen — named earlier this month to succeed Todd Vasos 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 that to over 3,000 stores by the end of 2022.

“DG is all about convenience and value, finding ways to help underserved rural communities. Along these lines, the company continuously seeks to improve its offering, including adding other items into the box like produce and NCI,” Tarlowe and Konik wrote in their report. “We view DG’s ongoing expansion into the health-and-wellness space as a way to provide further value to its customer as other big-box discounters (Walmart, Costco, etc.) have services like optical and pharmacy. We believe DG’s continued build out of its health-and-wellness offering will likely drive incremental share gains from competitors and enhance store productivity ahead.”

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