Dollar General follows Target and Walmart in anti-theft move

In tough economic times, people steal more.

Some people, of course, shoplift because they see an opportunity to get something for nothing. In other cases, people are stealing because they can't afford the basic essentials they need while others just take stuff they want.

It's a growing problem for retailers as theft climbed higher in the year the country opened back up after the Covid-era lockdowns.

Related: Amazon, Walmart, and Target have a secret returns policy

"When taken as a percentage of total retail sales in 2022, shrink accounted for $112.1 billion in losses, up from $93.9 billion in 2021, according to the (2023 National Retail Security Survey) - Get Free Report. 

Shrink isn't just shoplifting. It also accounts for internal (employee) theft and items lost for non-theft reasons. Shoppers stealing from stores, however, has been a problem that retailers including Walmart and Target (TGT) - Get Free Report, according to the CEOs.

In some ways, these retailers can blame themselves. Theft has increased at least partly because of the increased use of self-checkout. When people have to check themselves out, some miss items by accident or think they scanned them when they didn't while others exploit the system to intentionally steal.

It's a problem that could be fixed by technology or by an old-school solution. Dollar General (DG) - Get Free Report, like some Target and Walmart locations, has opted for a people-driven solution.

Dollar General rolls back self-checkout   

Dollar General uses a people-light model in its stores. To keep prices down, the chain has very few people working in its stores because labor adds to overhead costs which forces prices higher.

To compensate for having limited staffing, Dollar General has embraced self-checkout. That has led to an increase in the theft at the chain's 17,000-plus U.S. locations.    

CEO Todd Vasos, who recently took the chain's CEO job back from Jeff Owen, has decided to roll back the chain's self-checkout efforts. 

"We plan to increase the employee presence at the front end of our stores and in particular, the checkout area. While self-checkout has contributed to the convenience proposition for our customers in certain stores, it does not reduce the importance of a friendly, helpful employee who is there to greet customers and assist while the checkout process is happening," he said during the company's third-quarter earnings call.

This is a big change for Dollar General

Those comments come just three months after Owen had bragged about the chain's implementation of self-checkout.

"We have simplified operations by optimizing our container delivery and rolling out the self-checkout option, which was available in nearly 14,000 stores at the end of Q2," he said during the second-quarter earnings call.

Those efforts were a mistake, according to Vasos, who had served as CEO for seven years before retiring in 2022. Dollar General plans to correct the problem by spending an additional $150 million in its stores.

"That redeployment of money from the smart teams directly into our store where it touches our customer each and every day immediately is so important, and that's exactly what we're going to do," he said. 

Vasos believes the change will help the company cut down on theft.

"And as we do that, and I think it's very important to point out, it also helps the front end of that store. And it helps on the sales line because we've got somebody to meet, greet, and ring up the customer. It also helps on the shrink line because you've got somebody at the front end of the store that is always there to monitor the front end of the store," he said.

It does not plan to fully drop self-checkout. 

"We had relied and started to rely too much this year on self-checkout in our stores. We should be using self-checkout as a secondary checkout vehicle, not a primary," he added.

Dollar General brought Vasos back in October because the business wasn't performing well and its stock price had fallen as much as 59%.

The shares are up nearly 25% since Vasos' return.