Circling before pooping is normal behavior for dogs. It is normal for discriminating dogs, that is. Not all dogs circle before defecating because it depends on whether the animal is concerned if another dog has marked the same spot before.
A dog has anal glands that, when healthy, will express a trace of a stinky substance when the dog poops. These glands act to expel waste from the dog’s body. You can also consider the gland substance to be a calling card to other dogs, similar to urine marking. When the anal glands become irritated or diseased, the dog may circle to check the glands at the time of a defecating episode or circle, lick the area or scoot around. A good diet will keep the glands healthy.
When a dog has to poop, it will look for a suitable place. The dog may also sniff around as a way of checking, whether a dog has marked the same place before. It is sniffing for the noxious smelling scent and substance that is expressed from the anal glands when a dog defecates. Although, the elements may have removed the physical evidence of the feces, the scent can still be there. For this reason, a concerned dog will circle and sniff around for the scent of another dog.
When a dog circles before doing its business, it is a behavior related to its life among other dogs. Your dog has two lives, the one it lives with you and its more secret life that is shared with other dogs in one way or another. Even dogs that are mostly housebound are rarely and truly disinterested when they spot or catch the scent of another dog. Sniffing at other dogs and searching for the scent of other dogs, which have passed through the area is one of the ways that dogs transmit information to one another.