‘Maybe we cried too much’ over shoplifting, Walgreens CEO says


During the pandemic, major retailers warned of an increase in shoplifting and brazen shoplifting attempts. But a top Walgreens executive now says the craze may be overblown.

“Maybe we cried too much last year” about merchandise losses, Walgreens Chief Financial Officer James Kehoe acknowledged Thursday during an earnings call. The company’s churn rate — losses of merchandise due to theft, fraud, damage, misscanned items and other errors — fell from 3.5% of total sales last year to about 2.5% during the most recent quarter.

Kehoe’s message is a significant departure from comments about theft from Walgreens and other retailers like Walmart and Target over the past nearly three years.

Companies and retail industry groups tried to draw attention to shoplifting and “organized retail crime” groups smashing windows and robbing aisles of merchandise, urging lawmakers to take action. The incidents certainly happened: many political leaders and local and national news outlets, including CNN, seized on the viral robbery incidents.

Walgreens says it may have gone too far on safety.

So the traders sprung into action. Some have begun locking up more products like deodorant and toothpaste, adding extra security guards and even closing stores.

Last January, Walgreens ( WBA ) said its cuts had grown more than 50% year-over-year. The company blamed part of that jump on organized retail crime and closed five San Francisco-area locations in 2021, citing theft as the reason for the closures.

“This is not petty theft,” Kehoe said last January. “These are the gangs that actually come in and empty our cosmetic stores. And that’s a real problem.”

But a year later, Kehoe said Thursday that the company has added too much extra security to the stores.

“We’ve probably put in too much and we could use some distance from that,” he said of the security staff. The company has found that private security guards are “largely ineffective” at deterring theft, so it’s putting in more police and law enforcement officers instead.

While Walgreens may have overstated the threat of shoplifting over the past few years, the truth is that shoplifting has always been a problem for retailers—and often increases during recessions and other periods of economic hardship, when people are desperate and may feel the need to turn to petty cash. crime in order to survive. Moreover, recent factors such as shortages of store staff and cash registers can make it easier for thieves to steal.

The National Retail Federation estimated that the curtailment 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 say shoplifting has worsened during the Covid crisis.

“Along with other retailers, we have seen a significant increase in theft and organized retail crime across our business,” Target ( TGT ) CEO Brian Cornell said in November.

Walmart ( WMT ) CEO Doug McMillon said last month on CNBC that “theft is a problem” and “bigger than it has historically been.” He warned that shops could be closed if it continued.

However, it is not clear which numbers are added up.

For example, data released by the San Francisco Police Department did not support the explanation Walgreens gave that it was closing five stores because of organized retail theft, the San Francisco Chronicle reported in 2021.

One of the stores that closed had only seven reported incidents of shoplifting in 2021 and a total of 23 since 2018, according to the newspaper. Overall, the five stores that closed had an average of fewer than two reported thefts per month since 2018.

Similarly, a Los Angeles Times analysis of 2021 figures released by industry groups on organized retail crime losses found that “there is reason to doubt the problem is anywhere near as big or widespread as they say.”

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