Dollar General Sued Again Over “Disorganized,” “Uninviting” Stores

Dollar General has faced multiple lawsuits recently accusing it of routinely overcharging customers. Now the retailer is facing multiple lawsuits accusing it of running messy, disorganized, “uninviting” stores.

The latest case comes from an individual shareholder who accuses company executives of misleading investors like him, downplaying or ignoring problems that have impacted stores’ efficiency and the shopping experience, dragging down the retailer’s stock price in the process.

Over the past several years, plaintiff Nathan Silva alleges, Dollar General executives touted “significant progress made to improve supply chain issues, enhancements to the customer experience, strategic initiatives and incremental investment of approximately $100 million in stores.” This appeared to cheer investors who believed the retailer was on the right track, as Dollar General’s stock price more than doubled between 2019 and early last year.

But behind the scenes, Silva’s lawsuit claims, company executives knew there was a very different story they weren’t telling. “As a result of chronic understaffing, employees lacked sufficient time to update merchandise pricing or deal with inventory issues as they arose,” the lawsuit argues. Employees were placed “in virtually impossible situations where assigned tasks could not be completed within the allotted time,” which led to “crowded aisles and disorganized shelves,” and “an uninviting shopping environment which dissuaded consumers from patronizing Dollar General stores.”

While all of this was going on, Dollar General “was systematically and routinely overcharging customers at checkout at prices higher than their shelf price,” the lawsuit states. Over the past couple of years, several states and several individual Dollar General shoppers have sued the retailer, accusing it of pricing irregularities in which shelf tags displayed lower prices than those actually charged at checkout. “As a result,” Silva argues, “the company risked the loss of customers, lower sales, adverse regulatory actions, and reputational fallout,” all of which impacted the retailer’s financial performance and the value of the stock held by shareholders.

Last year, when Dollar General “began revealing the true nature and extent of the company’s operational issues,” the lawsuit goes on, the company’s stock price plunged. Dollar General has settled several of the overpricing lawsuits, and company executives are pledging to improve Dollar General’s stores. But Silva argues the retailer should have been up front about its problems from the very beginning.

Silva’s lawsuit comes a few months after a similar one accused Dollar General of misleading investors into believing it was in much better financial shape than it actually was. That lawsuit, too, accuses Dollar General of “chronic understaffing,” “deceptive pricing” and “a slovenly and uninviting shopping environment.”

Just a couple of months ago, Dollar General’s CEO promised investors that the company was going “back to the basics,” with more helpful and efficient employees who aren’t overworked, less clutter in the stores, more products that people are looking for, and fewer unwanted items on the shelves. “Overall, we believe these actions will drive improvements in customer satisfaction,” CEO Todd Vasos said.

But the changes may be too little, too late for disappointed investors who’ve lost money and patience with the retailer. Silva’s lawsuit accuses Dollar General and its executives of breaches of fiduciary duties, unjust enrichment, waste of corporate assets, and more. As a result of the executives’ actions, he claims, “the company has suffered damage, not only monetarily, but also to its corporate image and goodwill.”

So Dollar General is pledging to turn things around and make the store experience better for shoppers. But it may take more than spiffed-up stores, less-frazzled employees and more accurate low prices to repair the retailer’s image with investors, for whom Dollar General lately has been anything but a good deal.

Image source: Logan Rickert