We hate to say we told you so, but… well. Walgreens CEO Tim Wentworth revealed in a Q1 earnings call that “when you lock things up… you don’t sell as many of them. We’ve kind of proven that conclusively.”
Target, Walgreens, CVS, and a host of other retailers have made brick-and-mortar increasingly frustrating, and, given the rise of online retailers and delivery services, some shoppers just aren’t dealing with it.
What happened?
Retailers sounded the alarm on shoplifting. In particular, Walgreens reported a 52% rise in lost inventory — AKA “shrink” — in 2020 and 2021, per Fortune.
Their response was to lock up inventory, including most personal care items, forcing customers to ask employees to unlock various cases. Some retailers implemented systems that allow customers to unlock cases with their phones.
Shoppers don’t like it, and 27% of them will abandon a purchase if they encounter a lock.
So what will Walgreens do?
Walgreens plans to close ~450 underperforming stores this year and pivot its retail selection to focus on wellness and proprietary brands.
But regarding curbing inventory loss, Wentworth described it as “hand-to-hand combat” and suggested there may be some “creative” solutions on the horizon, but what those are remains unclear.
Some stores use:
- Increased surveillance tech
- Employee training
- Body cams
- Partnerships with law enforcement
- Reduced entry/exit points
- Electronic security tags
Some of these would be hard to implement — imagine a security tag on every box of toothpaste — but some, like a dedicated security guard, may not bother customers who don’t intend to steal.
Brick-and-mortar retailers could also incentivize customers to place mobile pickup or delivery orders with them versus rivals like Amazon, but that doesn’t really solve the whole in-store shopping issue.
More broadly…
… shrink is hard to quantify, with Walgreens’ former CFO James Kehoe saying that maybe the company had “cried too much” about it in the past.
Plus, reports of a gigantic uptick in post-pandemic shoplifting were ultimately retracted upon further scrutiny.
Without sufficient data to understand who is shoplifting, how much, and why, it may be difficult for stores and their communities to implement meaningful solutions that don’t drive off paying customers.
