Dollar General Doubles Down on Self-Checkout Instead of Flashier Cashierless Options

While ecommerce giant Amazon has an eye on expanding its cashierless retail experience into travel and entertainment, another retail titan, Dollar General, is turning its attention to self-checkout. In a recent Q1 2022 earnings call, COO Jeff Owen said Dollar General has launched a pilot of self-checkout-only stores and plans to test this concept at about 200 locations throughout 2022. Meanwhile, the discount retailer is also expanding its self-checkout option from 8,000 to 11,000 of its 18,000 U.S. stores that also boast traditional checkout. (For those keeping score, that’s nearly quadruple Walmart’s 4,700 U.S. locations). Costs Self-checkout is key to Dollar General’s goal to “reinforce our position as a low-cost operator,” Owen said during the call. “We continue to be pleased with our results, including strong customer adoption rates as a result of the success of self-checkout and popularity with customers.” Self-checkout-only, on the other hand, has the potential to “further enhance the convenience proposition while enabling our associates to dedicate even more time to serving customers,” he added. Dollar General declined to comment beyond the Q1 call. Inflation Has Become a Perception Problem for Companies In addition, Brad Jashinsky, director analyst at Gartner, noted one employee can watch four to six self-checkout stations, which will help reduce labor costs. “I would also hypothesize that self-checkout may be yielding either more frequent purchases per store or higher average basket size, which is likely the KPI for the success of the program,” added Zach Weinberg, vp of ecommerce at performance marketing network Reprise Digital. “They also haven't indicated any reduction in talent, so it would appear the costs of self-checkout implementation are being offset by the incremental revenue, wherever it is coming from.” Cashierless Jashinsky noted self-checkout is “also much less expensive and easier to implement than fully cashierless stores,” which have recently been in vogue. Matt Moorut, senior principal analyst at Gartner for Marketers, agreed. “Self-checkout might not be a futuristic option, but Dollar General’s brand is established to serve everyone, so really, self-checkout fits much better,” he added. Inflation This comes at a time of economic uncertainty when discount retailers like Dollar General are increasingly popular. Research from location analytics firm Placer.ai shows that while prices have increased across the board, discount retailers remain comparatively cheaper, which helped drive a 9.6% uptick in year-over-year monthly visits for Dollar General in April. “If and when prices decrease again, shoppers who began shopping at dollar stores or at Goodwill due to the recent inflation may well choose to maintain their frugal habits,” said a Placer.ai blog post. “Given many of these companies’ ambitious expansion plans, the current economic climate could be cementing these brands’ status as newly minted retail giants.” Moorut agreed Dollar General is well-positioned to do well if there is a recession, but had a word of caution. “If they can’t continue to deliver customers’ expectations and scale their operations to meet increased demand, then they could still face competition from other low-price offerings capturing market share,” he said. Circle K Goes Checkout-Free in 6 Arizona Stores