Dollar General, a retail giant, has taken on the role of a stern overseer in an effort to combat theft. The company is implementing various stringent measures that would give even the most seasoned thieves pause. Faced with the ongoing issue of retail theft, Dollar General is introducing strategic changes to curb what CEO Todd Vasos refers to as “shrink” – a term used to describe the substantial financial loss incurred due to shoplifting.
The company’s approach includes removing items that are frequently stolen from their store shelves. This could mean your favorite candy bar or that hard-to-find pack of batteries being removed from display due to their appeal to shoplifters. Additionally, Dollar General is discontinuing self-checkout options in numerous stores, eliminating the chance for customers to slip extra items past the scanner unnoticed.
Dollar General fights back against thieves with plan to remove theft-prone merchandise, self-checkout laneshttps://t.co/PyClLR5v2u
— Henry Hodge Jr (@henrydjr) June 4, 2024
In a recent earnings call, Vasos was candid about the impact of shrink on their business. He described it as the most significant challenge facing the company and outlined a comprehensive plan for shrink reduction that spans across all areas of the organization—ranging from modifications in the supply chain to in-store strategies designed to enhance security.
As of May, Dollar General had already transitioned 3,000 stores away from self-checkout, bringing the total number of such conversions to 12,000 since the start of the fiscal year. In March, they announced an ambitious plan to remove self-checkout from 300 stores severely affected by theft and converted self-checkout registers to assisted-checkout in approximately 9,000 stores. The move is akin to replacing an unsupervised playground with a tightly controlled examination hall.
However, Vasos warned not to expect immediate results from these changes. While these steps represent a significant shift in strategy, he believes that the real benefits will be seen later. He said, “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 ’24 with a more material positive impact expected in 2025.” It’s a long-term strategy.
The company’s efforts don’t stop here. Dollar General’s supply chain teams are working tirelessly to ensure prompt deliveries, while merchants are focused on decreasing inventory levels to reduce the risk of theft. Furthermore, items that are frequently stolen will be systematically removed from inventory.
The financial implications of this anti-theft campaign are already visible. For the quarter ending March 31, gross profit as a percentage of sales dropped to 30.2%, a decrease of 145 basis points. This decline was caused by a combination of increased shrink, markdowns, a higher proportion of consumable sales, and lower inventory markups. It’s a challenging situation, but one that Dollar General believes will lead to improved financial health in the long run.
As Dollar General continues its fight against theft, customers may notice changes during their shopping trips. Whether it’s fewer self-checkout lanes or missing high-theft items, the message is clear: the era of easy theft is over. So remember—Dollar General is keeping an eye out during your shopping sprees.
Photo Credit: Mike Mozart
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