Five Below Joins Dollar General by Officially Ditching Self-Checkout

In a surprising move, Dollar General, one of the nation's leading discount retailers, is reversing its self-checkout strategy under CEO Todd Vasos — and it’s not the only store doing so.

After years of heavy investment in self-checkout technology, Dollar General admitted that this approach has been detrimental to its business and has decided to eliminate self-checkout options at approximately 12,000 locations.

Now, citing similar “shrink” reasons, Five Below is following suit, scaling back on self-service technologies to combat issues like theft and improve customer experience . Five Below's CEO, Joel Anderson, said that it was the biggest change the company has made in its theft-mitigation efforts.

Here’s why more stores are making the change and what it means for customers.

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Shifting trends in retail

This shift reflects a broader trend in the retail industry, as many giants are re-evaluating their use of self-checkout systems and acknowledging the importance of human assistance in customer interactions.

Dollar General's quarterly earnings call unveiled their decision to increase staffing across stores nationwide, signaling a departure from the self-checkout trend that had gained momentum in recent years.

Vasos admitted, "We started to rely too much this year on self-checkout in our stores," recognizing that the system's convenience does not outweigh the importance of a friendly and helpful human cashier.

Hiring more workers

The company is committing a substantial $150 million to boost labor hours, reallocating $50 million from the "smart teams" unit to cover the expenses associated with this shift. The "smart teams" initiative, designed to manage inventory, will now be repurposed to enhance customer service at the checkout counters.

This move aligns with Vasos's vision of having dedicated employees to greet, assist, and facilitate the checkout process, ultimately improving sales and inventory management.

The problem with self-checkout

Dollar General's decision to reduce its reliance on self-checkout comes after a 1.3% decline in same-store sales in the most recent quarter. The company attributes this downturn to an increase in shrinkage or missing inventory, which has impacted profit margins.

This admission is a cautionary tale for other retailers that have similarly embraced self-checkout as a primary means of serving customers.

The issue extends beyond Dollar General. Recent analyses reveal that shoppers are 21 times more likely to make errors at self-checkout than at staffed lanes, resulting in "partial shrink."

Additionally, according to a LendingTree study, nearly one in seven shoppers have confessed to purposefully stealing items at self-checkout, with almost half expressing a willingness to repeat the act.

This alarming trend has prompted a broader reassessment of the impact of self-checkout on both customer experience and shrink rates.

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Many retailers are reconsidering self-checkout

Major retailers such as Costco and Walmart have started responding to these concerns with changes to their self-checkout systems. Costco, for instance, now requires staff to check membership cards in the self-checkout lanes and assist with scanning items. In a bold move, Walmart announced the removal of self-checkout from at least three stores in New Mexico, opting for traditional staffed registers instead.

The growing consensus among retailers is that self-checkout should serve as a supplementary option rather than a primary transaction method. Dollar General's shift toward increased human staffing aims to rectify immediate issues and underscores a commitment to prioritizing customer satisfaction and personalized service.

This change in approach is also a response to evolving customer preferences, challenging the assumption that technology-driven convenience always aligns with consumer desires.

Dollar General's acknowledgment that a friendly and helpful employee can enhance the overall shopping experience reflects a deeper understanding of the nuanced dynamics between technology and human interaction in retail.

1. Bottom line

M-Production/Adobe

Dollar General's bold move signals a broader reckoning within the industry. The narrative is shifting from the allure of seamless technology to the recognition that shoppers want humans to assist them in shopping. This is perhaps mutually beneficial, as large companies report missing inventory, possibly stemming from self-checkout.

The entire retail industry is walking back its efforts in having less staff with automated checkout systems.

It could be a great time to work in retail as more jobs are available. This move can help eliminate some money stress from both the company and potential employees while giving customers what they want. It's a very rare win-win-win scenario.

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