Retail theft forces major changes at Dollar General, Walmart
Consumers will likely have mixed feelings about the new efforts both chains are making to cut down on shoplifting.
Theft has always been a part of retail. The challenge for retailers is finding the right mix of enforcement balanced with convenience to keep theft in check while also making things easy for customers.
Honest shoppers don't like dealing with a receipt check as they leave a store. They also don't feel great about workers monitoring them at self-checkout and some people even avoid using that sometimes convenient option over fears that a mistake or item that does not scan will be seen as shoplifting.
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Retail theft numbers did climb, according to the most recent report from the National Retail Federation (NRF). It's not a huge jump as the average shrink rate climbed from 1.4% in 2021 to to 1.6% in 2023.
"When taken as a percentage of total retail sales, that represents $112.1 billion in losses in 2022, up from $93.9 billion in 2021," according to the NRF.
Shrink, it should be noted, isn't just shoplifting, although that is a major component of it.
"While retail shrink encompasses many types of loss, it is primarily driven by theft, including organized retail crime. Theft – both internal and external – accounts for nearly two-thirds (65%) of shrink overall and up to 70% in some retail sectors," the trade organization shared.
Combating retail theft creates a dilemma for retailers including Walmart and Dollar General that want to make shopping convenient and cut down on labor costs. Self-checkout, in many cases, does that, but it also increases intentional and unintentional theft.
That has led both retailers (albeit to different extents) to make a drastic change. Image source: Walmart.
Dollar General makes a checkout change.
Dollar General uses a people light model of staffing its stores. In theory, having fewer workers allows the company to pass on those savings to its customers. The problem is that aside from messy stores with inventory that's not properly shelved, the chain has a lack of supervision of its customers.
In offering self-checkout Dollar General (DG) - Get Free Report freed up workers to check on other areas of the store. That put customers on a certain honor system where they were often checking themselves out without an employee being near them. That practically invites people to steal (or ignore when an item does not scan after repeated attempts) and the company has taken drastic steps to correct the problem.
As part of a $150 million overall investment in staffing, Dollar General will drastically cut down on self-checkout in its stores.
"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 convenient 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," said CEO Todd Vasos.
Self-checkout won't go away, but there will an employee nearby in stores that offer it.
"We should be using self-checkout as a secondary checkout vehicle, not a primary," he added.
Walmart cuts self-checkout too
Walmart (WMT) - Get Free Report has not made a move as drastic as Dollar General. The chain has, however, removed self-checkout at some locations and has employees overseeing the process at its stores. Those workers have the ability to shut-off a self-checkout station in order for security to have time to come over and check on a shopper believed to be stealing.
The retailer has removed self-checkout in New Mexico, but has denied media reports that it did the same in Massachusetts and Maine. Walmart has declined to share why changes were made in any specific location and does not comment on its security operations in any specific store.
Walmart has, however, changed how it describes its latest effort to offer self-checkout, but also cut down on theft, on its website.
“Over the past few years, we have rolled out new Hosted Checkouts in a number of our stores. Our associates working in the Customer Host role can show customers to available registers, help them through the checkout process and answer any questions they may have. This new checkout process is designed to help customers complete their shopping even faster,” the company shared.
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