Dollar General is scaling back in-store inventory to simplify things both upstream in the retailer’s overall supply chain and distribution centers, as well as in its stores.

Dollar General Corp., a retail chain that provides access to affordable products and services through more than 20,000 stores, is focusing on scaling back some items and restocking stores faster, executives said during a recent earnings call. The discount retailer has been focusing on cutting costs, necessitating the retooling of its supply chain though new distribution centers (DCs) and a stronger reliance on its own private fleet. Dollar General is a member of Food Shippers of America (FSA).

Dollar General’s total additions to property and equipment in the first quarter of 2024 were U.S. $342 million, including approximately $78 million for distribution and transportation-related projects.

Total additions to property and equipment in the first quarter of 2024 were $342 million, including approximately U.S. $78 million for distribution and transportation-related projects, and $13 million for information systems upgrades and technology-related projects, according to the company’s Chief Financial Officer Kelly Dilts.

As store sales improve, optimizing inventory will remain a high priority for the company, according to Dilts, adding that scaling back in-store inventory “simplifies things both upstream in the supply chain as well as in our stores.”

Dollar General’s focus on selling more consumables and marking down more inventory contributed to Q1 net sales increasing 6.1% to $9.9 billion compared to $9.3 billion a year ago, according to a Q1 earnings press release. The retailer also credited elevated in-store traffic for a 2.4% year-over-year increase in same store sales.

The change in overall business strategy (which includes supply chain) aligns with the turnaround plan set by CEO Todd Vasos, who returned to the company in October 2023 following the departure of Jeffery Owen.

Shifting Supply Chain Strategy

Dollar General is on what it calls a “back-to-basics” strategy that involves reducing the number of products sold in stores, which is part of the retailer’s effort to sell excess inventory, according to Vasos. He also said Dollar General is committed to a net reduction of up to 1,000 SKUs within its supply chain by year’s end, confirming that “we are well on our way to meeting that goal.”

Vasos anticipates that fewer products moving through the retailer’s warehouses will ease distribution constraints. He also mentioned that Dollar General is focused on restocking merchandise sought by its core customers: “Our distribution and transportation teams have taken aggressive action to improve their service to our stores, and these efforts have led to significantly higher OTIF levels compared to the same time last year.”

Vasos said Dollar General expects to experience improved distribution efficiencies after it exits 12 temporary warehouses and moves into new permanent facilities in Arkansas and Colorado later this year.

Related Articles:

• Food Chain Snapshot: Dollar General Announces Plans for Three New DCs
• Dollar General Corp. Reports First Quarter 2024 Results (Source for article content)
• Food Shipper Round-Up: 2022 Top Stories

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