Dollar General is joining the growing list of retail chains reversing course on self-checkout technology.
“We had started to rely too much this year on self-checkout in our stores,” Dollar General CEO Todd Vasos said Thursday on an earnings call. “We should be using self-checkout as a secondary checkout vehicle, not a primary.”
Dollar General had aggressively expanded self-checkout stations, adding them to more than half of its approximately 19,000 stores. The company also piloted stores with only self-checkout options and no cashier lanes. Like other retailers, Dollar General bet self-checkout would reduce its labor costs and speed up checkout for customers.
But Dollar General, which has skeleton staffing levels in stores, has recently been re-assigning workers to the front of its stores to ring customers up.
The company revised its self-checkout strategy to improve sales and cut down on merchandise losses, known as “shrink.” Shrink includes shoplifting, employee theft, damaged products, administrative errors, online fraud and other factors.
“It helps on the sales line because we’ve got somebody to meet, greet and ring up the customer,” Vasos said. “It also helps on the shrink line because (we’ve) got somebody at the front end of the store that is always there to monitor” the area.
Shrink has been a growing problem for retailers, who have blamed shoplifting for the increase in losses and called for tougher criminal penalties.
But retailers’ self-checkout strategies have also contributed to their shrink woes. Retailers lose more possible sales with self-checkout than full-service cashiers, both from intentional shoplifting and honest errors by customers.
One study of retailers in the United States, Britain and other European countries found that companies with self-checkout lanes and apps had a loss rate of about 4%, more than double the industry average.
Dollar General is the latest company to backtrack on self checkout.
Booths, a British supermarket chain, said it’s removing self-checkout stations in all but two of its 28 stores. Walmart removed self-checkout machines at some stores in New Mexico earlier this year. ShopRite pulled them at a Delaware store after customer complaints.
Five Below, the discount toy retailer, said that shrink at stores with more self-checkout lanes was higher, and it will increase the number of staffed cash registers in new locations.
Other retailers are making tweaks to self-checkout policies.
At a handful of stores, Target has restricted self-checkout to customers buying 10 items or fewer. Customers buying more than 10 items are required to use full-service lanes with cashiers.
Costco said it’s adding more staff in self-checkout areas after it found that non-members were sneaking in to use membership cards that didn’t belong to them at self-checkout.