Dollar General takes action on cluttered stores, marking low items

• Dollar General is trying to cut excess inventory to tame its chaotic stores.
• The retailer is reducing inventory and using special teams of employees to clean stores.
• Many Dollar General stores have been stocked with excess inventory for years, Insider reported.

Dollar General is trying to get its chaotic and crowded stores under control.

The Dollar Store chain is discounting millions of items to move extra inventory, especially non-consumable items like home decor and toys, that have been clogging the aisles at its stores. CEO Jeff Owen said on Dollar General’s second-quarter earnings call that these writedowns would result in a $95 million loss to the company’s operating profit in the second half of 2023.

“We think it will boost traffic and reduce excess inventory more quickly,” Owen said on the call.

To clean up its stores, Owen said, Dollar General also deploys “smart teams,” or groups of employees who shuttle between multiple stores to organize excess inventory. The teams, one in each of Dollar General’s US regions, are part of the $50 million the company adds to its labor spending.

“The stores that these teams have been able to reach, we’ve seen sales accelerate and continue and they haven’t leveled off,” Owen said.

A former Dollar General employee who worked on a smart team in Texas told Insider that the job involves taking unfilled inventory from carousels, or metal carts carrying boxes of merchandise that have become a common sight at the ends of aisles at many Dollar General stores. . The employee said the employee’s smart team is usually dispatched to stores before they undergo their annual inventory review.

“She was basically renovating the entire store,” the former employee said. “We’re going to throw all the little things away,” the clerk said, referring to Dollar General items that were each discounted to a cent in the store’s inventory and became targets for bargain hunters.

Dollar General’s same-store sales for the second quarter fell 0.1%. Analysts surveyed by S&P Capital IQ were expecting growth of 0.8%.

The messy stores could be a turn-off for middle-income shoppers who have historically become a major customer base for dollar stores during recessions as their core customer—the low-income shopper—is squeezed by the rising cost of living.

Those regressed shoppers have been used to the neater and more orderly shopping conditions of full priced stores.

“The condition of some Dollar General stores over the course of this year has not been helpful in converting new shoppers into bigger spenders and increasing basket size overall,” Neil Saunders, managing director of GlobalData Retail, said in a note to customers Thursday.

“While few consumers expect Dollar General to be a place of great inspiration, basic store management standards — such as not completely clogging aisles with crates of merchandise, which is a consequence of overstocking — are important,” he added.

With more discount store options to choose from and price-focused chains like Walmart, there are fewer reasons for these consumers to turn to Dollar General.

The aisles at many Dollar General stores have been clogged with everything from dog food to school supplies over the past few years. Employees told Insider that one of the reasons for the mess was that Dollar General didn’t put in enough man-hours to maintain it.

This has led to multiple problems, such as local firefighters closing Dollar General stores because merchandise is blocking fire exits. A former Texas employee also told Insider about a store where Dollar General’s excess stock was chewed and excreted by rats.

Do you work at Dollar General and have a story you want to share? Contact this reporter at abitter@insider.com