Dollar General is cracking down on rampant retail theft. This issue has been a major problem for the business.
The company plans to remove frequently stolen items. It will also eliminate self-checkout options from thousands more stores.
CEO Todd Vasos discussed this during an earnings call. He said shrink "continues to be the most significant headwind."
Shrink refers to lost or stolen merchandise.
"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," Vasos said.
In May, the company converted 3,000 more stores away from self-checkout. This brings the total to 12,000 locations converted since the fiscal year began.
In March, Dollar General outlined a plan to remove self-checkout from 300 stores with the biggest shrink issues. They also converted self-checkout registers to assisted-checkout in about 9,000 stores.
Despite these changes, immediate impacts aren't expected.
"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 '24 with a more material positive impact expected in 2025," Vasos said.
Supply chain teams are working to ensure timely deliveries. Merchants are reducing inventory levels, Vasos noted.
Additionally, Dollar General will remove "high shrink" items, which are most likely to be stolen.
For the quarter ending March 31, gross profit as a percentage of sales fell to 30.2%. This was a decrease of 145 basis points, mainly due to increases in shrink, markdowns, a greater consumable sales mix, and lower inventory markups.
