All through the pandemic, main retailers have warned about surging theft and an increase in brazen shoplifting makes an attempt. However a prime Walgreens govt now says the freakout might have been overblown.
“Perhaps we cried an excessive amount of final 12 months” about merchandise losses, Walgreens finance chief James Kehoe acknowledged Thursday on an earnings name. The corporate’s fee of shrink — merchandise losses as a result of theft, fraud, damages, mis-scanned objects and different errors — fell from 3.5% of whole gross sales final 12 months to round 2.5% throughout its newest quarter.
Kehoe’s message is a notable shift from feedback about theft from Walgreens and different retailers like Walmart and Goal over the past almost three years.
Firms and retail trade teams have tried to attract consideration to shoplifting and “organized retail crime” rings smashing home windows and grabbing aisles stuffed with merchandise off cabinets, urging lawmakers to crack down. Incidents have actually occurred: Many political leaders and native and nationwide information retailers, together with CNN, have picked up on viral incidents of smash-and-grab robberies.
So retailers took motion. Some started locking up extra merchandise like deodorant and toothpaste, including further safety guards and even shuttering shops.
Final January, Walgreens
(WBA) stated its shrink was up by extra 50% from the 12 months prior. The corporate blamed a part of that spike on organized retail crime and closed 5 places within the San Francisco space in 2021, claiming theft as the explanation for his or her closure.
“This isn’t petty theft,” Kehoe stated final January. “These are gangs that really go in and empty our shops of magnificence merchandise. And it’s an actual concern.”
However a 12 months later, Kehoe stated Thursday that the corporate added an excessive amount of further safety in shops.
“In all probability we put in an excessive amount of, and we’d step again a bit of bit from that,” he stated of safety staffing. The corporate has discovered personal safety guards to be “largely ineffective” in deterring theft, so as a substitute it’s placing in additional police and legislation enforcement officers.
Although Walgreens might have overblown the shoplifting menace over the previous few years, it’s true that theft has at all times been an issue for retailers — and that it usually spikes throughout recessions and different intervals of financial hardship, when persons are determined and should really feel the necessity to flip to petty crime to maintain themselves. What’s extra, latest components like shortstaffed shops and self-checkout could make it simpler for thieves to steal.
The Nationwide Retail Federation estimated that shrink value retailers $94.5 billion in 2021, up from $61.7 billion in 2019 earlier than the pandemic. Shoplifting usually doesn’t go reported to the police, however corporations have stated theft has worsened throughout the Covid disaster.
“Together with different retailers, we’ve seen a major improve in theft and arranged retail crime throughout our enterprise,” Goal
(TGT) CEO Brian Cornell stated in November.
(WMT) CEO Doug McMillon stated final month on CNBC that “theft is a matter” and “larger than what it has traditionally been.” He warned shops may shut if it continued.
Nonetheless, it’s not clear the numbers add up.
For instance, knowledge launched by the San Francisco Police Division doesn’t assist the reason Walgreens gave that it was closing 5 shops due to organized retail theft, the San Francisco Chronicle reported in 2021.
One of many shuttered shops that closed had solely seven reported shoplifting incidents in 2021 and a complete of 23 since 2018, in response to the newspaper. General, the 5 shops that closed had fewer than two recorded shoplifting incidents a month on common since 2018.
Equally, a 2021 Los Angeles Occasions evaluation of figures launched by trade teams on losses as a result of organized retail crime discovered “there may be cause to doubt the issue is anyplace close to as massive or widespread as they are saying.”