Walgreens Executive Says Shoplifting Threat Was Overstated

Other corporate giants have also complained about the effect of retail theft on profits.

Walmart’s chief executive, Doug McMillon, told CNBC in December that an increase in shoplifting could lead the company to close stores. In November, Target’s chief financial officer, Michael Fiddelke, said shrinkage had reduced the company’s profit margin by more than $400 million in 2022. Mr. Fiddelke did not specify how much of the shrinkage was from shoplifting.

Alec Karakatsanis, the founder and executive director of Civil Rights Corps, a nonprofit that fights for criminal justice reform, said that Mr. Kehoe’s backtracking showed why the public, and the news media, should be more critical of corporate claims about crime.

“I think unfortunately across the United States, the reporting on this issue really lacked this kind of skepticism for a long time,” Mr. Karakatsanis said.

Inventory shrinkage in the past five years was on average 1.5 percent, according to the National Retail Foundation, which surveyed 63 retailers in May and June 2022. The survey found that in 2021, about 37 percent of shrinkage was from external theft and 28 percent was from internal theft.

Most companies surveyed said that external theft had become more of a priority in the past five years, as had threats of violence. The companies surveyed said that the threat that had grown the most as a priority in 2021 was violence by customers against workers.

Hung-Chung Su, an associate professor of operations management at the University of Michigan-Dearborn, said that while Mr. Kehoe spoke positively about the decrease in theft, 2.5 percent shrinkage is still a problem for the company.

Based on Dr. Su’s research, retailers rely too much on technology to prevent theft.

“If you really want to reduce retail shrinkage or retail theft, it ultimately comes down to the employees,” Dr. Su said. “But during the pandemic, the employee turnover at retail stores increased. People found better jobs, better-paying jobs.”