No. of Recommendations: 26
If I may…
The “shrink” problem at DG and similar stores may be significant, to be sure. And it’s entirely possible that part of the cause is undermanned stores and/or the clientele that frequents them. But…
The National Retail Federation, which would be in a position to know says:
“
Across American retailers, average shrink—the industry term for inventory lost for any reason, expressed as a percentage of total sales—has remained relatively steady at around 1.5% for years, according to the National Retail Federation, a trade group that’s long lobbied for a more robust law enforcement response to retail theft. But shrink accounts for many types of things, including paperwork and checkout errors, losses in transit, returns, spoilage and theft from employees or vendors. The quote is from the latest BusinessWeek, not available directly but through Apple News at:
https://apple.news/Azt0oKQCKSOyH_ezJGrNMawIt’s a fascinating story, detailing how the “lock up” of products at CVS, Target, Walgreen’s etc is having a terrible effect on shopper and shopping, and driving people online by making the traditional shopping experience so terrible that there’s little option. Go ahead, try to find someone at one of the “big” stores to open one of those cases for you. But then, as you otherwise might, stand there and consider the product, compare it to others while the employee hovers over you while waiting to race to the next person who has worked the (frequently not working) “Need Help?” Button.
The story is better than I can describe here, but includes anecdotes of underwear being locked up on the 2nd floor of an urban Target (really? People are going to lift a carton of underwear, take it down the escalator and run out of the store? Underwear?) Or the $40 lotion being on the open shelf next to the $6 deodorant behind the locked plastic barrier?
But let me disagree with the idea that there’s no moat. The moat was (but may no longer be) the locations of Dollar Stores, DG, etc. They began rural, in food deserts or sundries deserts or wherever it was too remote to make running a WalMart (or especially a Target) worthwhile. It was really the 1990’s version of the 1890’s general store, a little of everything in bite size packages and hopefully cheap. WalMart couldn’t compete because
WalMart wasn’t there . Or if it was there it was 15 miles away, and you have to park a 1/2 mile away and get lost wandering around the Noah’s Ark of retail.
The problem they have faced is the ease with which the stores can be placed - and the gold rush that led to tens of thousands of them being dropped everywhere, often right next to each other in the greatest example of parasite marketing gone awry.
In an over-retailed country it’s become an over-retailed segment. Some consolidation is in order, and in fact that is happening. More staffing isn’t going to happen, at least in significant numbers, and foolish initiatives like over-reliance on self-checkout without monitors (WalMart, Target, Kroger, etc. have a hairy eyeball monitor watching; DG doesn’t.) Reducing theft could be pretty trivial. Obvious video monitors for the aisles and elimination of unmonitored checkout would probably go a long way. More to the point, 2/3 of shrink happens before product ever hits the shelves. It’s the delivery, or the stock room, not the well-publicized but rare “retail theft gangs” we’ve all heard so much about. Even Walgreens and CVS admit they got too far out over the skis attributing the problem to that.
Lest this post get longer than War & Peace, I’ll just close by saying “Yes,” in the too tough pile for now. No, not insolvable. And I have yet to see a WalMart that’s anywhere near “better than a Target”.
