During Dollar General’s BB #:172794 Q4 2023 earnings call held March 14, the word “shrink” came up 37 times in the scripted remarks and question-and-answer with analysts.
Shrink has become such a problem that the Goodlettsville, TN-based company turned to an AI solution to monitor it, and ultimately made the decision to pull self-checkouts from thousands of stores.
CEO Todd Vasos said the company spent $150 million to increase labor hours, focused on front-of-store personnel.
“We were able to see through AI what has transpired over the course of many months of transaction data at self-checkout,” he said.
AI found both theft and inadvertent shrink from mis-rings at self-checkout.
“Long story here to say we’ve made decisions based on AI activity to pull out in 9,000 stores and go to that assisted check stand,” Vasos said. “That should immediately do a lot for us.”
Dollar General had self-checkout at 14,000 of its 20,000 stores. Stores remaining with self-checkout will have a five-item limit per transaction, and 300 of the highest shrink stores will have self-checkout options removed immediately.
More fresh options
Dollar General also plans to add fresh produce to 1,500 stores in the next calendar year. By the end of 2024, the company plans to offer fresh produce in nearly 7,000 stores.
“When we put into place our ability to grow cooler count, to grow fresh produce the way we have over the years – very methodically – to be profitable at is as well as then enabling all that and soon-to-be-produced in the near future into self-distribution, I would tell you that we feel very good about that,” Vasos said.
The company’s Dollar General Market concept, which has a larger assortment than the traditional footprint, also brings welcome food assortments to communities, he said.
“As you think about municipalities across the country that are in food deserts and/or looking for help in more fresh options, that mini-mart, our DG Market is really a lifesaver for those areas and a true lifeline for those areas where the groceries have left years ago,” Vasos said. “We believe in that concept greatly. We like the sales economics there.”
