Retail crime in the United States continues to advance. When technological innovations were added to benefit consumers, criminals took advantage of them to abuse. Now, Dollar General is backing away from its attempts to offer better services to its customers, with transcendental changes to prevent theft.
On May 30, Dollar General released its financial results for the first quarter of fiscal 2024, which saw a 6.1% increase in net sales due to an increase in customer traffic. Within the report, shrinkage is a term retailers use to refer to the loss of inventory due to factors other than sales, such as theft.
“We are experiencing contraction and sales mix headwinds that are greater than we had initially anticipated entering the year,” Kelly Dilts, Dollar General’s chief financial officer, said in a statement accompanying the report.
Dollar General’s gross profit on net sales this quarter was still lower than a year ago, and This decrease “is mainly attributed to greater shrinkage”according to the company.
During the earnings call with investors on May 30, Dollar General CEO Todd Vasos revealed that The company continues to make significant efforts to reduce its contraction.
“Shrinkage continues to be the biggest hurdle in our business, and we are implementing an end-to-end approach to reducing shrinkage across the organization, including efforts in our supply chain, merchandising and within our stores,” he said.
What are Dollar General’s changes to prevent theft
According to Dollar General executives, the company’s effort is focused on eliminate self-checkouts in many of its stores to combat theft. The retailer initially began converting about 9,000 of its locations to checkouts during the quarter. Now, those efforts are expanding.
“Following the rapid and successful conversion of these stores,” Vasos told investors that the company also decided to eliminate self-checkout systems in another 3,000 stores in May. This means that a total of about 12,000 Dollar General locations have been stripped of self-checkout lines this year.
“While this represents a significant change in our stores, we believe it is the right course of action to drive greater customer engagement while also better position ourselves to begin reducing losses in the second half of 2024with a more material positive impact expected in 2025,” Vasos explained in the call.
Vasos also confirmed that self-checkout options will be available in a limited number of stores, with higher volume and low loss.
Dollar General is not the only store that has chosen to make adjustments to self-checkouts to prevent theft. Target announced the use of this tool limited to only 10 products.
Another adjustment Dollar General is making is removing “high loss” products from shelves. In other words, the company seeks to remove the items that are most commonly stolen.
“(There is) a net reduction of up to 1,000” items within the Dollar General supply chain by the end of the year.
“We believe that all of that… will help that shrink line because too much inventory or excess inventory in some cases always leads to additional shrink,” Vasos concluded.
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