Did Walgreens lie about its shoplifting problem?

It’s looking like Walgreens could have blown its little shoplifting issue out of proportion. Here’s every part that you must know:

What happened?

Walgreens CFO James Kehoe on Thursday admitted the pharmaceutical chain could have “cried an excessive amount of last 12 months” over its presumed shoplifting problem, on which it blamed the high-profile closure of not less than five San Francisco stores in 2021. “We probably put in an excessive amount of [security], and we’d step back,” the chief told analysts on a results call.

Kehoe also said that Walgreens’ so-called “shrinkage” — or the term used to reflect inventory losses because of theft or damage, amongst other aspects — had “stabilized” and was around 2.5 percent of sales, versus 3.5 percent at the identical time last 12 months. The chain can be now counting on law enforcement for security, somewhat than “largely ineffective” private corporations, and is “quite completely satisfied with where we’re.” Walgreens didn’t specify how much of its shrinkage may very well be attributed to theft.

Why does this matter?

It may not appear so at first, but Kehoe’s disclosure was actually quite “remarkable,” considering how shoplifting complaints from retailers have perhaps unfairly exacerbated the present political debate around crime lately, The Recent York Times reports, per industry experts.

For instance, when closing the San Francisco stores in 2021, data from town’s police department didn’t support the theft rationale passed down from Walgreens corporate. Per an evaluation from The San Francisco Chronicle, which conceded that not all instances of theft are reported to the police, one among the closed stores had just seven reported theft incidents in 2021 and a complete of 23 since 2018. Similarly, a December 2021 review from the Los Angeles Times found that “there’s reason to doubt the [shoplifting] problem is anywhere near as large or widespread as [retail and law insiders] say.” And to that end, some skeptics on the time attributed the closures to not shoplifting, but to a call Walgreens had “long planned” to make, citing a 2019 SEC filing through which the chain revealed plans to nix roughly 200 U.S. stores.

Ultimately, per industry statistics, theft at Walgreens “likely amounts to lower than 1 percent of sales,” note Popular Information‘s Tesnim Zekeria and Judd Legum.

The shoplifting itself, the chain claimed each then and now, stems from “organized retail crime,” through which teams of thieves execute smash-and-grab robberies after which resell the stolen merchandise online. “This just isn’t petty theft,” Kehoe said presently last 12 months. “These are gangs that truly go in and empty our stores of beauty products. And it’s an actual issue.” But together with his recent comments, Kehoe seems to have not less than somewhat walked back those claims.

What about politics?

On a broader level, [s]hoplifting has been used to justify a resurgent law-and-order politics that has energized GOP campaigns over the past couple of years,” Henry Grabar writes for Slate. Notably, Walgreens’ complaints have played a “central role” in perpetuating that “national panic,” add Zekeria and Legum.

In California, for instance, the Walgreens store closures proved “a flash point in a stinging criminal justice debate that helped electrify the recall of former San Francisco District Attorney Chesa Boudin,” who was faraway from office by voters in the summertime of 2022, the Chronicle writes. And in Recent York, Republican Lee Zeldin was recently in a position to hold his own in a historically close race for governor, fueled largely by voters’ concerns about crime.

News media has otherwise bought into the frenzy, as well, Zekeria and Legum posit. Between 2020 and 2021, the pair write, the number of reports stories “featuring the keywords ‘organized retail crime’ or ‘organized retail theft’ increased by greater than 270 percent,” per the Center for Just Journalism. And within the case of Walgreens, journalists leaned into the “sensationalist” crime coverage they often find themselves drawn toward, allowing the drug store’s “dubious narrative” to resultingly “spread unchecked by among the largest news organizations within the country.”

“Recent news stories describe a shoplifting surge, but this narrative conflates an array of very different offenses right into a single crime wave said to be cresting at once, everywhere in the country, in a frenzy of naked avarice and shocking violence,” The Atlantic‘s Amanda Mull wrote in December 2021. But “the deeper you seek for real, objective evidence of an accelerating retail crime wave, the harder it’s to make sure that you recognize anything in any respect.”

Added Alex Karakatsanis, founder and executive director of criminal justice nonprofit Civil Rights Corps: “I believe unfortunately across the US, the reporting on this issue really lacked this sort of skepticism for a very long time,” he recently told the Times.

Theft stays to some extent a pain point for retailers, each large and small — otherwise, stores would not be bothered to put in shopper-loathed glass covers over their most precious inventory, one industry expert told Slate‘s Grabar. And it is not like Walgreens is alone in sounding the alarm — executives from other chains, like Goal and Walmart, have also done so lately.

But “the far greater issue” for these stores is that they have been “hit hard by online shopping,” one other expert added. “Add to that the declining urban foot traffic led to by distant work, a period of aggressive expansion, competition, and consolidation, and a few pharmacy-business headwinds, and you’ve a recipe for downsizing,” Grabar posits.