Dollar General CEO raises major red flag about consumers

For months, economists and retailers have warned about the financial strain facing lower- and middle-income consumers. Higher earners, on the other hand, have largely been sheltered from the effects of the rising costs of living.

A growing number of CEOs and industry insiders, from retailers as varied as Walmart and ThredUp , have said they're seeing shifts in the behavior of consumers earning $100,000 a year or more.

Dollar General's CEO Todd Vasos is the latest to join that growing chorus.

Dollar General sees a shift among high-income shoppers

Speaking at the Goldman Sachs Global Consumer and Retail conference , Vasos said it's no longer the chain's core consumer base (low- and middle-earners) who are feeling the financial strain.

Instead, he says earners of all stripes are now feeling the pinch.

"What we've seen in this economy, and again, not a surprise probably to anybody in this room, is we've seen a customer across all cohorts of income levels being somewhat distressed, especially in sustained inflation," Vasos said.

"The interesting thing with this economy, because of the other sustained headwinds of inflation over the years that have passed, [is that] even that middle to upper middle is acting more like a lower-income shopper these days," he continued.

Vasos said the company was even hearing from shoppers in the $100,000+ bracket that they no longer felt as though they were high-income, due to factors such as the rising cost of living, inflated gas prices, and stagnating wages.

As a result, the CEO says they've become more value seeking than ever, shopping at discount retailers like Dollar General for essentials.

This is not the first time Vasos has spoken out about the financial health of Dollar General's shoppers.

During the retailer's second-quarter earnings call in late August, he told investors that the chain's core consumers were in "distress" and "definitely still stretched."

Dollar General finds opportunity in trade-down shoppers

Despite these financial challenges, Dollar General isn't worried about the state of its business.

Instead, executives are confident that its proximity to shoppers and its value proposition will keep it afloat whether budgets remain tight or the economic tides turn.

"We're very convenient, right?," Vasos said at the Goldman Sachs event. "We're close — we're within 5 miles of 75% of the U.S. population. Many of our customers ride a bike to our stores or walk to our stores. That's how close they are."

The distance piece alone makes Dollar General many consumers' first choice, Vasos continued. Especially if high gas prices are a concern and are placing pressure on household budgets.