Dollar General is the latest retailer to limit self-checkout

In news that will dismay those of us who dread awkward small talk with cashiers, the retreat from self-checkout continues. Dollar General will convert “some or all self-checkout registers to assisted-checkout options” in around 9,000 of its 20,000 stores, CEO Todd Vasos said during the company’s Q4 2023 earnings call on March 14. The retailer plans to remove self-checkout entirely from more than 300 of its “highest shrink stores.” At other Dollar General locations, Vasos said, customers using self-checkout will be limited to five items or fewer—a change that Target and Walmart are also piloting.

The backtracking on self-checkout is part of Dollar General’s broader strategy to combat shrink. AI monitoring determined that self-checkouts contributed to both theft and accidental shrink through scanning errors, Vasos said. The retailer’s also increasing employee presence at the front of its stores and paring back inventory in its efforts to reduce shrink.

Dollar General identified shrink as one of the headwinds that drove its gross profit down 94 basis points, from 31.2% to 30.3%, between fiscal year 2022 and 2023. Shrink increased more than 100 basis points for both Q4 and FY 2023, CFO Kelly Dilts said. The retailer had a weak 2023 overall, seeing its net income dive 31.2% and its diluted EPS drop 29.3% from 2022. But shrink is only one factor affecting it.

Inflation is driving Dollar General’s customers to spend more on groceries and other essentials and less on higher-margin discretionary items, Vasos said. The company’s responding by adding more coolers for fresh and frozen food to stores and making fresh produce available in up to 1,500 more locations in 2024. It already offers “produce in more than 5,400 stores,” Vasos said.

Unlike fellow dollar-store chain Dollar Tree, which recently announced the closure of 1,000 of its Family Dollar stores, Dollar General plans to open 800 new stores this year. While it foresees net sales growth between 6% and 6.7%, it also anticipates its diluted EPS will decline or remain flat.