Walmart plans to reopen an Atlanta location with a police substation inside the store, an extreme response to the growing problem of retail theft.
And it is not an answer for the industry.
Adding a police station to a store is not a solution that can plausibly be implemented industry-wide. It’s a great move to draw attention to the issue, which has been severely affecting several major retailers.
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Aim (TGT) – Get a free report CEO Brian Cornell has raised the challenge between keeping employees safe and preventing theft. He also talked about how shrink (the industry term for theft) has put pressure on the company’s profit margins.
His colleague, Lauren Hobart, CEO of Dick’s Sporting Goods, during the second quarter results call He described some details about how weight loss has affected his business.
“Based on the results of our most recent physical inventory cycle, the impact of theft on our shrink was significant to both our second quarter results and our future expectations for the remainder of the year,” he said.
Dick’s Chief Financial Officer Navdeep Gupta called the theft “a significant headwind that accounts for one-third of our merchandise margin decline.”
It’s also become pretty clear that, like Walmart and Target, Dick’s has struggled to figure out how to reduce theft while keeping workers safe.
“Shrinkage is an industry-wide problem. In fact, it’s a problem for our entire country,” Hobart said.
“We are going to fight to the extent we can to keep our teammates, our athletes and our stores safe, and that is with increased security, with locked cameras and by working with local authorities and our industry partners .
Image source: Justin Sullivan/Getty Images
This is where the big retailers are on reduction
Walmart, Target and Dick’s aren’t the only ones sounding the alarm about theft.
Home Depot, Walmart, Best Buy, Walgreens and CVS have also said shrink has been a growing problem. That’s not just political rhetoric; is backed by the latest Hayes International loss survey, covering 26 large retailers:
- 81% of retailers reported increased losses in 2022.
- The number of thieves arrested increased by 50.9% and recoveries totaled $237 million, an increase of 90.5%.
- Dollars recovered from shoplifters at stores where no arrests were made totaled $485 million, an increase of 44.1% in 2022.
So while increased enforcement has had some success, losses at large retailers have still increased significantly.
Tony D’Onofrio, CEO of TD Insights, an expert in retail, security and emerging technologies, believes he has the answer.
Here’s a real solution to the theft problem at Walmart, Target and Dick’s
While D’Onofrio claims to know what will work to prevent retail theft, he also knows that a solution that Walmart, Target and Dick’s have used to some extent won’t work.
“Blocking merchandise to reduce shrink reduces revenue and increasingly drives consumers to alternative retail models,” he wrote in his website.
D’Onofrio says the multifactorial answer to shrink reduction is technological improvements, new laws and industry partnerships with authorities.
“Retail technology solutions have not kept pace with the growth of the problem,” he said.
He has the same opinion about the law. “The legal framework is stuck in the past and is not keeping pace with developments outside the retail industry,” he added.
D’Onofrio, however, says a solution currently exists and does not require extreme measures such as store closures or in-store police stations.
“To effectively address the issue of retail loss, strong partnerships across these boundaries are needed, especially between retailers and authorities,” he said.
“Good (news: successful) models exist in various parts of the world, but different, more innovative thinking will be needed to evolve towards broader global adoption,” he shared.
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