Act Daily News
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Throughout the pandemic, main retailers have warned about surging theft and an increase in brazen shoplifting makes an attempt. But a prime Walgreens government now says the freakout might have been overblown.
“Maybe we cried too much last year” about merchandise losses, Walgreens finance chief James Kehoe acknowledged Thursday on an earnings name. The firm’s fee of shrink — merchandise losses on account of theft, fraud, damages, mis-scanned objects and different errors — fell from 3.5% of complete 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 Target during the last almost three years.
Companies and retail business teams have tried to attract consideration to shoplifting and “organized retail crime” rings smashing home windows and grabbing aisles filled with merchandise off cabinets, urging lawmakers to crack down. Incidents have definitely occurred: Many political leaders and native and nationwide news shops, together with Act Daily News, 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.
Last January, Walgreens
(WBA) mentioned its shrink was up by extra 50% from the 12 months prior. The firm blamed a part of that spike on organized retail crime and closed 5 areas within the San Francisco space in 2021, claiming theft as the rationale for his or her closure.
“This is not petty theft,” Kehoe mentioned final January. “These are gangs that actually go in and empty our stores of beauty products. And it’s a real issue.”
But a 12 months later, Kehoe mentioned Thursday that the corporate added an excessive amount of further safety in shops.
“Probably we put in too much, and we might step back a little bit from that,” he mentioned of safety staffing. The firm has discovered non-public safety guards to be “largely ineffective” in deterring theft, so as a substitute it’s placing in additional police and regulation enforcement officers.
Though Walgreens might have overblown the shoplifting risk over the previous couple of years, it’s true that theft has at all times been an issue for retailers — and that it typically spikes throughout recessions and different durations of financial hardship, when individuals are determined and will 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 National Retail Federation estimated that shrink price retailers $94.5 billion in 2021, up from $61.7 billion in 2019 earlier than the pandemic. Shoplifting typically doesn’t go reported to the police, however corporations have mentioned theft has worsened through the Covid disaster.
“Along with other retailers, we’ve seen a significant increase in theft and organized retail crime across our business,” Target
(TGT) CEO Brian Cornell mentioned in November.
Walmart
(WMT) CEO Doug McMillon mentioned final month on CNBC that “theft is an issue” and “higher than what it has historically been.” He warned shops might shut if it continued.
However, it’s not clear the numbers add up.
For instance, knowledge launched by the San Francisco Police Department 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 the shuttered shops that closed had solely seven reported shoplifting incidents in 2021 and a complete of 23 since 2018, based on the newspaper. Overall, the 5 shops that closed had fewer than two recorded shoplifting incidents a month on common since 2018.
Similarly, a 2021 Los Angeles Times evaluation of figures launched by business teams on losses on account of organized retail crime discovered “there is reason to doubt the problem is anywhere near as large or widespread as they say.”