Dollar General has taken on the role of a strict disciplinarian in the vast arena of retail, launching an aggressive campaign against theft. The popular chain is implementing a range of measures that would make even the most audacious thieves reconsider their actions. This strategic shift is aimed at mitigating what CEO Todd Vasos diplomatically refers to as “shrink” – a term used to describe the substantial financial losses incurred due to rampant shoplifting.
Among the changes being implemented are the removal of frequently stolen items from store shelves. Imagine your favorite candy bar or that hard-to-find pack of batteries being removed from display due to their appeal to shoplifters. But the real game-changer? Dollar General is also phasing out self-checkout options in thousands more stores. That means no more slipping an extra item past the scanner while pretending to struggle with your wallet.
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 did not sugarcoat the situation. “Shrink continues to be the most significant headwind,” he stated, painting a picture of a company under attack. His solution? A comprehensive approach to shrink reduction that permeates the entire organization—from adjustments in supply chain management to in-store strategies that put even Fort Knox’s security to shame.
Back in May, Dollar General had already transitioned 3,000 stores away from self-checkout, bringing the total to 12,000 locations since the fiscal year began. In March, the company unveiled an ambitious plan to remove self-checkout from 300 stores heavily affected by theft and converted self-checkout registers to assisted-checkout in about 9,000 stores. It’s akin to replacing an unsupervised playground with a tightly regulated examination room.
However, Vasos warned not to expect immediate results. While these changes signify a significant shift, he emphasized that the real benefits will be reaped in due time. “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,” he explained. It’s a marathon, not a sprint.
The company’s strategy doesn’t end there. Dollar General’s supply chain teams are working tirelessly to ensure timely deliveries, while merchants are actively reducing inventory levels to minimize theft risks. Furthermore, those “high shrink” items—products that seem to vanish from shelves—will be meticulously removed from inventory.
The financial repercussions of this anti-theft crusade are already apparent. For the quarter ending March 31, gross profit as a percentage of sales fell to 30.2%, a decrease of 145 basis points. This drop was fueled by a combination of increased shrink, markdowns, a greater mix of consumable sales, and lower inventory markups. It’s a bitter pill to swallow, but one that Dollar General believes will pave the way for a healthier balance sheet in the long run.
As Dollar General wages its war against theft, customers may notice some changes during their next shopping trip. Whether it’s fewer self-checkout lanes or missing high-theft items, the message is clear: the era of easy theft is over. So if you’re planning a shopping spree, just remember—Dollar General is keeping an eye out.
Photo Credit: Mike Mozart
h/t: Patriot Clash
