On Thursday, the CEO of Dollar Tree Inc. announced that the discount retailer is adopting a highly defensive stance towards shoplifting.
CEO Rick Dreiling stated earlier today that the company, which operates Dollar Tree and Family Dollar, has plans to introduce “several new shrink formats” within the last half of the year. In retail terminology, “shrink” generally refers to instances of theft and other types of inventory losses.
“It goes everything from moving certain SKUs [stock-keeping units] to behind the check stand,” he explained. “It has to do with some cases being locked up. And even to the point where we have some stores that can’t keep a certain SKU on the shelf just discontinuing the item.”
Dollar Tree had a decrease in its gross margin due to the impact of shrink. This particular metric stood at 29.2% during the second quarter, reflecting a year-over-year decline of 220 basis points.
CFO Jeff Davis mentioned that shrink is a lagging indicator due to the gradual reduction in store size throughout the year. He further elaborated that it requires time for the implemented measures to effectively show results.
The remarks made by Dollar Tree’s executives coincides with comments from Kohl’s CFO Jill Timm a day earlier, who characterized shrink as a persistent issue in the retail industry. Similar to Dollar Tree, she outlined certain steps Kohl’s has implemented to tackle this challenge. The various measures includes securing products to fixtures using cables, offering only testers of beauty products, increasing staff presence in fitting room sections, and having more employees in proximity to the front entrances.
