Dive Brief:
- Dollar General is redirecting labor hours away from its traveling smart teams toward in-store associates, CEO Todd Vasos said on a Thursday Q3 2023 earnings call. The company expects the change to enable better experiences through readily available assistance and higher in-stock rates.
- The move marks a shift in how Dollar General is using the $150 million it invested to bolster its workforce this year. About $50 million worth of labor hours will be redeployed from smart teams, comprised of floating workers who help out where needed, to individual stores.
- “After review, we continue to believe this level of investment is appropriate,” Vasos said during the call. “But as we do with every dollar we invest, we must ensure we are spending it to drive the greatest return, which means we are directly helping our store teams support our customers.”
Dive Insight:
Some analysts are questioning Dollar General’s rapid expansion strategy, which has propped up sales growth but done little to preserve shrinking market share. Investing more in the human touch could help the off-price retailer stand out from its competitors.
Dollar general isn’t the only retailer investing in its associates to enhance the customer experience. Best Buy is seeing higher NPS regarding workers using its Sidekick App, and Ulta Beauty is leaning on staff to boost security without harming CX.
Better staffing will be essential to the two areas of focus Vasos believes will drive the greatest improvements.
The first is using the additional labor to increase the associate presence in stores, particularly around the checkout area. Having more workers available will ensure someone is there to meet, greet and ring up customers, according to Vasos.
“While self-checkout has contributed to the convenient proposition for our customers in certain stores, it does not reduce the importance of a friendly, helpful employee who is there to greet customers and assist while the checkout process is happening,” he said.
A larger associate presence will also deter theft by ensuring there is always someone to monitor the front of the store, according to Vasos.
Dollar General's second major focus is on improving on-shelf availability, according to Vasos. Having more associates in stores will help eliminate the frustrations of out-of-stocks.
“We are reemphasizing the role played by our store teams in our perpetual inventory management process, which we believe will positively impact our on-shelf availability as well as our customers’ convenience perception in our sales,” Vasos said.
Dollar General’s focus on basic store operations is expected to improve retention rates, particularly among store managers. Vasos noted that veteran managers benefit the staff and drive a more positive experience for customers.
“We are getting back to the basics here at Dollar General across all levels of the organization,” Vasos said. “Our desired results will not materialize overnight, but we believe we will see some early wins and continue to make progress towards executing on the fundamentals that have been foundational to our success over the past 85 years.”
