Dollar General is accelerating its push toward a leaner, more efficient supply chain, having removed more than 1,500 stock keeping units (SKUs) from its inventory in recent years.
The move, highlighted by COO Emily Taylor during a March earnings call, reflects a broader strategy aimed at simplifying operations, improving product availability and strengthening overall performance.
The impact is already visible in the company’s financials. Merchandise levels fell by 5.7% year-on-year in the quarter ending January 30, representing a $379 million reduction. On average, store inventory declined by around 7%.
CEO Todd Vasos described the SKU reduction initiative as a “big win” for the business, noting that prioritising faster-moving products has helped stabilise operations and support revenue growth. He confirmed that further reductions are planned as part of an ongoing optimisation strategy.
At the same time, the company has improved in-stock performance, with availability increasing by approximately 250 basis points year-on-year. CFO Donny Lau said the retailer is now focused on ensuring inventory growth remains below sales growth, maintaining a disciplined approach to stock management.
Operational improvements are also being implemented across the network. Distribution centres are adopting more aggressive seasonal sorting strategies to accelerate product flow, while the company’s private truck fleet is being leveraged to enhance inventory movement and reduce replenishment times.
The initiative aligns with a broader trend across the retail sector. Companies such as Bath & Body Works and Lowe’s are also reducing SKU complexity to improve customer experience and operational efficiency, with Lowe’s targeting a 15% reduction by the end of 2025.
