Throughout the pandemic, major retailers have warned of an increase in theft and outright shoplifting attempts. But a senior Walgreens executive now says the scandal may have been overblown.
“Maybe we cried too much last year” over merchandise losses, Walgreens chief financial officer James Kehoe acknowledged Thursday on an earnings call. The company’s loss rate (merchandise losses due to theft, fraud, damage, misscanned items, and other errors) fell from 3.5% of total sales last year to about 2.5% over the past quarter .
Kehoe’s message is a notable departure from comments about theft from Walgreens and other retailers like Walmart and Target over the past nearly three years.
Businesses and retail industry groups have sought to draw attention to store robberies and “organized retail crime” rings breaking windows and taking over aisles packed with merchandise off the shelves, urging lawmakers to take strong action. Certainly incidents have occurred: Many political and local leaders and national news mediaincluding CNN, have reported on viral incidents of hit-and-run robberies.
So retailers took action. some started store more products like deodorant and toothpasteadding additional security guards and even closing stores.
Last January, Walgreens
(WBA) He said his loss increased by more than 50% from the previous year. The company blamed part of that increase on organized retail crime and closed five San Francisco-area locations in 2021, citing theft as the reason for its closure.
“This is not petty theft,” Kehoe said last January. “These are gangs actually going in and emptying out our beauty supply stores. And it’s a real problem.”
But a year later, Kehoe said Thursday that the company added too much extra security in stores.
“We probably put in too much, and we might back off of that a little bit,” he said of the security staff. The company has found that private security guards are “largely ineffective” in deterring theft, so it is hiring more police and law enforcement officers instead.
Although Walgreens may have exaggerated the threat of shoplifting in recent years, it’s true that shoplifting has always been a problem for retailers, often increasing during recessions and other periods of economic hardship, when people are desperate. and they may feel the need to turn to petty crime to support themselves. Additionally, recent factors such as understaffed stores and self-checkout may cause easier for thieves to steal.
The National Retail Federation estimated shrinkage 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 have said shoplifting has worsened during the Covid crisis.
“Along with other retailers, we have seen a significant increase in retail theft and organized crime across our business,” Target
(TGT) CEO Brian Cornell said in November.
(WMT) CEO Doug McMillon said last month on CNBC that “theft is a problem” and “higher than it has historically been.” He warned that stores could close if it continues.
However, it is not clear if 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 organized retail theft, the San Francisco Chronicle reported. reported in 2021.
One of the shuttered stores that closed had just seven reported theft incidents in 2021 and a total of 23 since 2018, according to the newspaper. Overall, the five stores that closed had fewer than two reported theft incidents per month on average since 2018.
Same, a 2021 Los Angeles Times analysis of figures released by industry groups on losses due to organized retail crime they found that “there are reasons to doubt that the problem is as big or widespread as they say.”
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