Taming the ‘wild frontier’ of discount retailing: Dreiling leaving his mark as Dollar General CEO
Rick Dreiling, Chairman and CEO, Dollar General
When Kohlberg, Kravis and Roberts approached the much-heralded chain drug store and supermarket veteran Rick Dreiling to run Dollar General some seven years ago, the move signaled the investment firm’s determination to return its huge but somewhat floundering retail holding to fiscal health and public ownership as quickly as possible.
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Hiring Dreiling as Dollar General’s new top executive was a success. The company staged an initial public offering in 2009, just two-and-a-half years after KKR took the company private in a buyout, and years ahead of its own turnaround plan and IPO schedule for the Goodlettsville, Tenn.-based discounter.
Dreiling credits then KKR investment partner and turnaround specialist Mike Calbert as “very instrumental in the journey” of returning Dollar General to full fiscal health and independence. But the choice of Dreiling as CEO was the critical factor that set the stage for what was to be a sweeping business and cultural transformation at the 75-year-old small-box discount chain.
“When I came to this channel, this was the last wild frontier of discount retailing,” Dreiling recalled. What was critically needed to restore the company’s momentum, he told DSN, was to apply “all of that discipline that you learn in the grocery business and drug business and big box [retailing]” in areas like “labor control and category management.”
Dreiling brought with him a long and distinguished career in food and drug retailing. Before joining Dollar General as CEO in January 2008, he served as chairman and CEO of Duane Reade Holdings, the dominant drug chain serving the metropolitan New York market. Prior to that, he was EVP and COO of storied West Coast drug chain Longs Drug Stores.
Dreiling joined Longs in 2003, after garnering broad expertise in food and combo store retailing as EVP of marketing, manufacturing and distribution at Safeway Stores, and as president of Vons, a Safeway division serving Southern California.
He began his career in 1969 as a part-time clerk with Safeway in Kansas, working his way up the ranks and earning a degree in industrial relations before being promoted in 1998 to president of Vons. “I started off bagging groceries in a Safeway store,” he remembered. “My first promotion was sorting bottles, ... and I thought that was the greatest job in the world.”
Under Dreiling’s leadership, Dollar General has regained its sales and profit momentum, fundamentally retooled its approach to merchandising and category management, and harnessed the power of its information technology to transform and smarten up its marketing, merchandising and expansion strategy.
“We used to generate a ton of data, but not a lot of information,” said the CEO. “And now we can look at that data and turn it into something that’s actionable.” Equally critical, Dreiling and his executive team have knocked down old departmental silos to unify Dollar General’s management and decision-making under a common vision and go-to-market strategy.
“Merchandising and operations have to function seamlessly together,” the CEO asserted in an exclusive interview with DSN. “When I first got here, I said to the [former management] team, ‘Show me a store.’ And the supply chain operator, the merchant and store operations couldn’t even agree on a store for me to see.”
When he arrived, Dreiling launched a rapid overhaul of the executive team, keeping valued decision-makers but bringing in a slate of retail, wholesale and supply-chain veterans from such companies as Duane Reade, Longs Drug Stores, Vons, Safeway, Eckerd Corp. and Starbucks to fill many key management slots. “The wealth of experience they brought to the table was in channels [such as] grocery and drug.
To their credit, said Dreiling, “that’s exactly what they did.” The new management team set about learning the techniques, processes and appeal of value-driven general merchandising in a smaller store format with a broad but concentrated mix of convenience, personal care, household and consumable items.
“Rather than coming in here and trying to change the world ... everybody took their time,” he explained.
Also critical to Dollar General’s recent success, said Dreiling, was its operational flexibility. “When you have to come in and be a change agent, it’s a heck of a lot easier when the organization is changing with you, rather than fighting you. And particularly if you look at ’08 and ’09, when we drove north of 9% comps [same-store sales gains] two years in a row, that’s the organization coming with you. It’s executing a plan.”
The CEO also credited “the culture and the road work that had been laid by the Turners” prior to the modern era of Dollar General. That era culminated with the retirement of Cal Turner Jr., son of founder Cal Turner Sr., in 2003, and the hiring of David Purdue to the top spot.
After taking the reins in early 2008, Dreiling quickly made his mark. He eschewed top-down hierarchical decision-making in favor of consensus-building through regularly scheduled cross-functional meetings — and through a culture that encourages mentoring and career-track advancement in the field and stores.
“There’s not a lot of politics here,” said the CEO. “I eat lunch down in the cafeteria; I don’t eat it up here. And my team and I ... do our best work over a glass of wine.”
That flattened-out, informal management style epitomizes the culture at Dollar General, and is clearly one of the factors in the company’s meteoric rise in American retailing.
“I think that attitude has worked its way down the organization,” said Dreiling. “We will disagree with each other and fight each other, but we are family when we go home. And I think that’s pretty unique in an almost $20 billion company.”
Dreiling is also a firm believer that “one of the most important things a CEO does is to make sure he or she isn’t the smartest person at the table. That means you’re bringing in good people with new thinking and new ideas.”
Supplementing that management muscle are “a tremendous number of people who have been here for 10, 12, 15 years, and we’re very blessed,” said Dreiling. “We’ve got a tremendous amount of talent here. I think what we’ve done is a much better job of listening to that talent and giving them a chance to lay their cards on the table and get things done.
“So we did it together,” he added. “It wasn’t just a bunch of new people who just showed up with all these great ideas. The new people listened to a lot of the ideas that never got a chance to be heard.”