CNN
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Throughout the pandemic, major retailers have warned of an upsurge in theft and an increase in brazen shoplifting attempts. But a senior Walgreens executive now says the panic may have been overdone.
“Perhaps we cried too much last year” about commodity losses, Walgreens chief financial officer James Kehoe admitted Thursday during an earnings call. The company’s shrinkage rate (merchandise lost due to theft, fraud, damage, mis-scanned items and other errors) has fallen from 3.5% of total sales last year to about 2.5% in the last quarter.
Kehoe’s message is a notable change from the theft comments from Walgreens and other retailers like Walmart and Target over the past nearly three years.
Companies and retail industry groups have tried to draw attention to shoplifting and ‘organized retail crime’ rings smashing storefronts and seizing full aisles of merchandise on the shelves, urging lawmakers to get tough. Incidents have certainly occurred: many political leaders and national mediaincluding CNN, have noted viral incidents of armed robbery.
Traders have therefore taken action. Some start lock in more products like deodorant and toothpasteadding extra security guards and even closing stores.
Last January, Walgreens
(WBA) said its decrease had increased by more than 50% compared to the previous year. The company blamed part of that spike on organized retail crime and closed five locations in the San Francisco area in 2021, citing theft as the reason for their closure.
“It’s no small theft,” Kehoe said last January. These are gangs that come in and empty our beauty supply stores. And that’s a real problem. »
But a year later, Kehoe said Thursday that the company had added too much extra security to stores.
“We’ve probably invested too much of it, and we could take a step back from that,” he said of the security staff. The company has found private security guards to be “largely ineffective” at deterring theft, so instead it is putting in more police and law enforcement officers.
While Walgreens may have exaggerated the threat of shoplifting in recent years, it’s true that theft has always been a problem for retailers – and it often increases during recessions and other periods of economic hardship, when people are desperate and may feel the need to turn to petty crime to support themselves. Additionally, recent factors such as understaffed stores and self-checkouts can make easier for thieves to steal.
The National Retail Federation estimated that shrinkage cost retailers $94.5 billion in 2021, up from $61.7 billion in 2019 before the pandemic. Shoplifting often doesn’t go to the police, but businesses said theft has gotten worse during the Covid crisis.
“Along with other retailers, we have seen a significant increase in retail theft and organized crime in our business,” Target said.
(TGT) CEO Brian Cornell said in November.
walmart
(WMT) CEO Doug McMillon said last month on CNBC that “theft is a problem” and “higher than it has been historically”. He warned that stores could close if this continued.
However, it is not clear that the numbers add up.
For example, data released by the San Francisco Police Department does not support Walgreens’ explanation that it was closing five stores due to an organized retail robbery, according to the San Francisco Chronicle. reported in 2021.
One of the shuttered stores that closed had just seven reported shoplifting incidents in 2021 and a total of 23 since 2018, according to the newspaper. Overall, the five stores that closed had fewer than two recorded shoplifting incidents per month on average since 2018.
ditto, a 2021 Los Angeles Times analysis Figures released by industry groups on organized crime losses in retail found that “there is reason to doubt that the problem is as large or widespread as they claim”.
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