America’s biggest retailers say organized retail crime has grown into a multibillion-dollar problem, but the effectiveness of their strategies to address it and the validity of the data collected have come into question.
Over the past several years, companies such as Home Depot, Lowe’s, Walmart, Best Buy, Walgreens and CVS have sounded the alarm about organized gangs of thieves ransacking their stores and reselling the items on online marketplaces.
They have poured money into anti-theft strategies such as plastic casings, metal detectors, motion-sensing screens and AI-powered cameras, and have warned that if the problem isn’t improved, consumers could end up paying the price.
“Theft is a problem. It’s higher than it’s been historically,” Walmart CEO Doug McMillon told CNBC in December. “If it’s not fixed over time, prices will be higher and/or stores will close.”
However, the issue is not as clear-cut as retailers and trade groups have made it out to be.
Research by the National Retail Federation shows that retail will reduce costs for retailers $94.5 billion in 2021, up from $90.8 billion in 2020, but the data is largely qualitative and cannot be fact-checked because it is collected from an anonymized set by retailers.
Plus, the $94.5 billion in losses refers to shrink overall, meaning the difference between the inventory a company records on its balance sheet and what it can actually sell. This difference accounts for items that were shoplifted, but also includes inventory that was damaged, lost or stolen by employees.
External retail crime accounts for only 37% of those losses, or about $35 billion, the NRF data shows.
At least one major retailer recently admitted it may have exaggerated the problem.
“Maybe we cried too much last year,” Walgreens Chief Financial Officer James Kehoe said on an investor call in January when asked about the shrink. “We’re stabilized,” he added, saying the company is “quite happy with where we are.”
Still, law enforcement agencies and retailers insist organized retail crime remains a problem and said they stand by their data.
“I can tell you that in our world, we know crime is on the rise. We see it every day in our stores,” Scott Glenn, Home Depot’s vice president of asset protection, told CNBC. “Our internal information shows us that it is on a year-on-year basis and growing at double-digit rates.”
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