Perfect Circle

At first glance, deep-discount retailer Dollar General’s sponsorship of a NASCAR Busch Series race team doesn’t make sense. But the marriage of the chain and its team, Frank Cicci Racing with Jim Kelly, could not be a more perfect fit.

In January, Dollar General became the first deep-discounter to take to the track with a team sponsorship. And in March, Dollar General deepened its racing ties by signing on as the title sponsor of the Oct. 14 Busch Series race scheduled for Lowe’s Motor Speedway in Charlotte, SC.

“NASCAR is one of the fastest-growing spectator sports in America and our support of the sport is a great way to reach racing fans, many of whom are also Dollar General shoppers,” says Rick McNeely, Dollar General’s senior VP-seasonal merchandise, at the press conference held to announce the second NASCAR pairing. “Dollar General saw that the demographic profile of deep-discount shoppers was a match with those of NASCAR’s fan base.”

Though Dollar General hasn’t attributed its 13.4% same-store sales growth in April to its NASCAR ties, the sponsorship is having an effect that, according to research done by NASCAR, may be inevitable. NASCAR studies have shown that fans are three times as likely to try and purchase NASCAR sponsors’ products and services than those of non-sponsors.

Dollar General and other deep-discount retailers have shed an image as alternate or specialty shopping locations; at the same time, NASCAR has evolved and is no longer seen as a sport belonging solely to the Deep South. Both are now viewed as a destination for all.

According to research by ACNielsen Homescan, 50% of U.S. households with annual earnings of more than $70,000 shopped at dollar stores in 2004, up from 37% in 2000. Nearly two out of three households in the U.S. shop in the channel, averaging 13 visits per year.

Store locations for Dollar General, which now has nearly 7,600 outlets in 30 states, are also a near match with NASCAR’s fan base. The majority of Dollar General stores are situated in the South, as are 38% of NASCAR fans.

The sponsorship is the first major sports sponsorship for the retailer, and offers exposure of the Dollar General brand to about 75 million race fans. Dollar General’s car has a number of its vendor partners as co-sponsors, including Polaroid Alkaline Batteries, Unilever, Clorox, Johnson & Johnson, Pepsi, ConAgra and Gillette.

Rich Rubenstein, head of Mooresville, NC-based On Track Marketing, which handles the sponsorship for the retailer, said that Dollar General gave its venders a list of reasons why they should buy into the program. Those benefits include brand identification on the No. 34 Dollar General car, uniforms, pit banners and merchandising opportunities.

“Some of the sponsors, like Pepsi, already have sponsorships with NASCAR teams,” Rubenstein says. “However, as Dollar General grows, these vendors recognize the value of solidifying their existing relationship and tying into that further relationship as well.”

Ryan Kurek, president of motorsports for Leverage Sports Agency’ Charlotte, NC, says by getting its vendors on board, Dollar General is following discount retailer Target Corp.’s successful blueprint. Target, which sponsors a car in the NASCAR Nextel Cup Series, has vendors such as Fuji Film and Kleenex in tow, each of whom gets a small slice of visibility in the car’s paint scheme.

“Target has the vendors where they want them. If they get on board with its NASCAR sponsorship, Target will give the vendors better positioning in its stores,” Kurek says.

Jim Andrews, senior VP of Chicago-based IEG, adds that the use of vendors by retailers also helps offset the high cost of sponsorship (Dollar General didn’t disclose costs, but Andrews says a Busch Series team sponsorship can cost between $4 million and $6 million).

“Retailers like Dollar General are in a unique situation and can get their vendors involved in sponsorships, and vendors seem to like the concept,” Andrews says. “I think Dollar General is doing the right thing by getting its vendors involved.”

Rivals to Dollar General such as Dollar Tree and Family Dollar have had their moments in the NASCAR oval, but in the opposite role. Hershey Brands used to give its retailers the car’s main paint scheme on occasion as a sales incentive.

Dollar General is not just relying on trackside signage and a fancy paint scheme to draw attention to its sponsorship, Rubenstein says.

In addition to activating at the track with a racing simulator, Rubenstein said veteran NASCAR driver Randy LaJoie, who captains the Dollar General car, makes personal appearances at Dollar General events such as grand openings and corporate functions. So does Jim Kelly, the race team co-owner and NFL Hall of Fame quarterback, which gives the retailer additional star power.

Dollar General also boasts its NASCAR ties with P-O-P in its stores. The retailer is also developing a complete line of merchandise that will be exclusive to its stores, though Rubenstein would not identify which vendors will be involved. Dollar General is also considering a consumer sweepstakes to tie in the sponsorship, Rubenstein says.