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America’s largest retailers say organized retail crime has grown into a multibillion-dollar problem, but the effectiveness of their strategies to solve it and the validity of the aggregate data have been called into question.
Over the past several years, companies like this Home DepotAnd LouieAnd WalmartAnd best buyAnd Walgreens And CVS Raise the alarm about organized gangs of thieves looting their shops and reselling goods in online marketplaces.
They’ve poured money into theft-prevention strategies such as plastic cans, metal detectors, motion sensor displays and AI-powered cameras, and warn if the problem doesn’t improve, consumers could end up paying the price.
“Theft is an issue. It’s higher than it was in the past,” Walmart CEO Doug McMillon told CNBC in December. “If this is not corrected over time, prices will go up and/or stores will close.”
However, the problem is not quite as clear as retailers and trade groups make it out to be.
Studies by the National Retail Federation show retailers’ cost of retail contracting $94.5 billion in 2021, up from $90.8 billion in 2020, but the data is largely qualitative and unverifiable because it was collected from an anonymous group of retailers.
Additionally, losses of $94.5 billion indicate contraction in general, which means the difference between the inventory a company records on its balance sheet and what it can actually sell. This difference represents items that are stolen from stores but also includes inventory that has been damaged, lost, or stolen by employees.
NRF data shows that outside retail crime accounts for only 37% of those losses, or about $35 billion.
At least one major retailer recently admitted that it may have exaggerated the problem.
“We probably cried a lot last year,” James Kehoe, chief financial officer at Walgreens, said on a call with investors in January when asked about the downturn. “We’re plateauing,” he added, saying the company is “very happy where we are.”
However, law enforcement agencies and retailers insist that organized retail crime remains a problem, and have said they stand behind their data.
“I can tell you that in our world, we know crime is increasing. We see it every single day in our stores,” Scott Glenn, vice president of asset protection at Home Depot, told CNBC. “Our internal information shows us that this is on a year-over-year basis, growing at double-digit rates.”
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America’s largest corporations say retail crime is an epidemic, but how big is the problem?
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