Dollar General Shifts Away from Self-Checkout Amidst Shrink Concerns
Dollar General Corporation, a leading discount retailer based in the United States, is taking a step back from self-checkout technology in its stores. The company plans to remove self-checkout stands in approximately 300 locations with the highest instances of shoplifting and merchandise losses. Furthermore, Dollar General intends to convert some or all self-checkout registers in around 9,000 stores into regular checkout counters staffed by cashiers. In an additional 4,500 or so stores, the company will limit self-checkout to transactions involving five items or fewer.
Impact on Shrink and Theft
Dollar General’s decision to abandon self-checkout in certain stores is aimed at reducing shrink – a term used in the retail industry that refers to shoplifting, employee theft, damaged products, administrative errors, contact fraud, and other factors. The company, which has relatively limited staffing levels in its stores compared to other retailers, is more susceptible to shoplifting and merchandise losses.
CEO Todd Vasos explained the rationale behind this change during a call with analysts: “We believe these actions have the potential to have a material and positive impact on shrink.” The word ‘shrink’ was mentioned 37 times during this call.
Analyzing Data and Identifying Trends
Dollar General employed artificial intelligence to analyze hundreds of thousands of purchases made via self-checkout in order to determine which stores experienced the most instances of stolen merchandise and mis-scanned items.
Retail Industry Trends
Dollar General’s move to limit or remove self-checkout counters follows similar actions taken by other retailers. Family Dollar and Dollar Tree announced plans to close 1,000 stores combined, while British supermarket chain Booths has eliminated self-checkout stations from all but two of its 28 locations. Walmart removed self-checkout machines at some stores in New Mexico earlier this year, and ShopRite pulled them from a Delaware store following customer complaints.
Even Five Below, the discount toy retailer, reported higher shrink rates in stores with more self-checkout lanes and has decided to increase the number of staffed cash registers at new locations.
Target’s Adaptive Response
On Thursday, Target Corporation announced it would roll out a new ‘express self-checkout’ feature with a limit of 10 items or fewer at most of its stores. The company is also opening more traditional checkout lanes staffed by cashiers in response to consumer preferences and the challenges faced by self-checkout technology.
Retailers have increasingly adopted self-checkout stations as a means to reduce labor costs and expedite checkout for customers. However, the data suggests that retailers may be losing more potential sales with self-checkout compared to traditional manned cash registers due to both intentional shoplifting and honest errors by customers. One study of retailers in the US, UK, and other contact countries found that companies with self-checkout lanes and apps had a loss rate of about 4%, which is more than double the industry average.
In conclusion, Dollar General’s shift away from self-checkout in some of its stores reflects a growing trend among retailers to address shrink and theft concerns by returning to more traditional checkout methods. This approach is likely to continue as the retail landscape evolves, with companies balancing the benefits of self-checkout technology against the risks associated with merchandise losses.
