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The store chain has already removed self-checkouts from 12,000 of its more than 20,000 stores, the CEO said
Vasos said self checkout will remain in a limited number of higher volume stores. He added that the shift away from self checkout will drive increased customer engagement and should position the company to begin reducing shrink in the second half of 2024 with a material impact expected in 2025.
“Shrink continues to be the most significant headwind in our business,” Vasos said.
In addition to cutting self-checkouts, Vasos said the company’s supply chain teams are also addressing shrink on other fronts that include ensuring deliveries are on time and made in full. He said Dollar General is also focusing on delivering a more consistent front-end staffing presence and removing high-shrink SKUs.
Vasos also said during an earnings call that softness in discretionary categories reflects the continued spending pressure consumers are currently experiencing. Consumers “continue to be very value oriented in their shopping behavior, which we see manifested in accelerated share growth in private brands sales as well as increased engagement with items at or below the $1 price point,” Vasos said. “Importantly, we continue to do well with our core customers while growing with middle and higher income trading customers from adjacent cohorts.”
Dollar General’s first-quarter beat is “evidence that more defensively positioned consumable heavy models are positioned to navigate a softer, low-income backdrop,” Wells Fargo analysts led by Edward Kelly said in a note. Wells Fargo’s analysts said Dollar General’s “challenged performance” last year offers room for improvement. The retailer’s Q1 performance “suggests the company is on track for some improvement.”
However, “while we are disappointed to hear management admit in the release to experiencing shrink and mix headwinds greater than initially expected coming into the year, the margin didn't miss,” Wells Fargo said.
By Nate Delesline III on May 31, 2024
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