Walgreens exec says, ‘Maybe we cared too much about shoplifting’

Walgreens exec says, ‘Maybe we cared too much about shoplifting’

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Major stores have warned of rising theft and flagrant shoplifting attempts across the country. However, a senior Walgreens executive now claims the panic may have been overdone.

Contrary to comments made about theft at Walgreens and other retailers like Walmart and Target over the past nearly three years, Kehoe’s message is a clear departure.

Speaking to investors Thursday, Walgreens CFO James Kehoe said, “Maybe we cried too much last year” over inventory losses. Shrinkage, or product loss as a percentage of total sales, fell for the company from 3.5% of sales last year to about 2.5% of sales last quarter.

Retail companies and trade associations have tried to draw attention to theft and “organized retail crime” networks that smash windows and take aisles off shelves. You have called on the legislature to act. There have undoubtedly been incidents; Local and national news organizations, including CNN, have reported on popular smash and grab thefts.

Walgreens (WBA) said January shrinkage was up more than 50% year over year. The company closed five San Francisco-area locations in 2021, attributing their closures to theft and part of that increase to organized retail crime.

Retailers responded with action. Some began locking up more items like toothpaste and deodorant, hired more security guards, and even closed storefronts.

Kehoe stated in January last year, “This is no petty theft. These are gangs that actually break into our stores and steal all the cosmetics. And it’s a serious problem.

But a year later, Kehoe claimed on Thursday that the company had tightened retail security too much.

Referring to security personnel, he said, “Probably we’ve invested too much and we could scale back a bit from that.” deter theft. Theft has always been a problem for retailers, and it often increases during recessions and other times of economic hardship when people are desperate and feel the need to turn to petty crime to make a living. However, Walgreens may have exaggerated the shoplifting threat in recent years. Additionally, modern elements like self-checkout and understaffed facilities can make it easier for burglars.

According to the National Retail Federation, shrink would have cost retailers $94.5 billion in 2021, up from $61.7 billion in 2019 before the pandemic. Shoplifting often goes unreported to the police, but businesses claim theft has gotten worse since the Covid crisis. Target (TGT) CEO Brian Cornell stated in November that “along with other retailers, we have seen a significant increase in theft and organized retail crime across our industry.”

Walmart (WMT) CEO Doug McMillon explained on CNBC last month that theft is “a problem” and “bigger than what it has been in the past.” If this continues, he threatened shops with closure. However, it’s unclear how the numbers add up.

For example, according to information released by the San Francisco Police Department, Walgreens’ justification for closing five stores — organized retail theft — was unsupported, the San Francisco Chronicle revealed in 2021. According to the publication, one of the closed facilities had just seven documented thefts in 2021, and 23 in total as of 2018. Since 2018, the five closed stores have averaged fewer than two shoplifting cases per month.

Similarly, in 2021, the Los Angeles Times reported that it had “reason to doubt that the problem is anywhere near as large or pervasive as they claim” after analyzing data on losses attributed to organized retail crime were published by industry associations.

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