Dollar General Is Slashing Self-Checkout and Pulling Items From Shelves—Here's Why
The discount chain is still struggling under the weight of rising shrink.
The retail industry has had to reinvent itself over and over again. Over the past several years, theft has become one of the main factors driving these changes, as stores have been rolling out endless new measures to try to combat shoplifting. Target recently added item limits to its self-checkout lanes, while Kroger has implemented receipt checks at some of its stores. Now, Dollar General is slashing self-checkout and even removing items from shelves in an attempt to stem its losses.
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The dollar store chain released its financial results for the first quarter of the 2024 fiscal year on May 30. According to the report, Dollar General saw a 6.1 percent increase in net sales due to a rise in customer traffic.
Despite this, Dollar General's gross profit from its net sales this quarter was still lower than what it was one year prior, with the decrease "primarily attributable to increased shrink," the company said in its report.
Shrink is a term retailers use to refer to the loss of inventory from factors other than sales, such as theft.
"We are experiencing shrink and sales mix headwinds that are greater than we had initially anticipated coming into the year," Kelly Dilts, Dollar General's chief financial officer, said in a statement accompanying the report.
During a May 30 earnings call with investors, Dollar General CEO Todd Vasos revealed that the company is continuing to make significant efforts to reduce its shrink.
"Shrink continues to be the most significant headwind in our business, and we are deploying an end-to-end approach to shrink reduction across the organization, including efforts in our supply chain, merchandising, and within our stores," he said.
To help combat shoplifting, Dollar General has been focused on the elimination of self-checkout from many of its stores. The retailer initially started by converting around 9,000 of its locations to cashier checkout during the quarter. But now those efforts are expanding.
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"Following the quick and successful conversion of these stores," Vasos told investors that the company also chose to remove self-checkouts from an additional 3,000 stores in May. This means a total of around 12,000 Dollar General locations have now been stripped of self-checkout lanes this year.
"While this represents a significant change in our stores, we believe this is the right course of action to drive increased customer engagement while also better positioning us to begin reducing shrink in the back half of 2024 with a more material positive impact expected in 2025," Vasos explained on the call. "Moving forward, we plan to have self-checkout options available in a limited number of stores, most of which are higher volume and low-shrink locations."
This is not the only change Dollar General is making to push back against rising theft, however. The company has also been working on reducing its inventory in stores, with a particular focus on the removal of "high shrink" products from shelves. That is, pulling the items that are most commonly stolen.
According to Vasos, the company has committed to a "net reduction of up to 1,000" items within its supply chain by the end of the year.
"We believe all that … will help that shrink line because too much inventory or over inventory in some instances always leads to additional shrink," Vasos said.
Best Life reached out to Dollar General about these changes, and we will update the story with its response.
