Organized crime plagues retailers and fuels debate

America’s largest retailers say organized retail crime has become a multibillion-dollar problem, but the effectiveness of their strategies to solve it and the overall validity of the data have been called into question.

In recent years, companies such as home depot, lowes, Walmart, best buy, Walgreens And CV Organized gangs of thieves are sounding the alarm, looting their shops and reselling the goods on online marketplaces.

They have poured money into theft prevention strategies such as B. plastic suitcases, metal detectors, motion detectors and AI-powered cameras, and warn that consumers could pay the price if the problem does not improve.

“Theft is a problem. It’s higher than in the past,” Walmart CEO Doug McMillon told CNBC in December. “If this is not corrected over time, prices will go higher and/or stores will close.”

However, the problem is not as clear-cut as retailers and trade groups make it seem.

Studies by the National Retail Federation show that retail shrinkage will cost retailers $94.5 billion in 2021, up from $90.8 billion in 2020, but the data is mostly qualitative and cannot be fact checked, as they come from an anonymous group of retailers.

Additionally, the $94.5 billion in losses relates to total shrinkage, which is the difference between what a company carries on its balance sheet and what it can actually sell. This difference accounts for items stolen from the store, but also includes inventory damaged, lost, or stolen by employees.

Outside retail crime accounts for just 37% of those losses, or about $35 billion, NRF data shows.

At least one major retailer recently acknowledged that it may have exaggerated the problem.

“Maybe we cried too much last year,” Walgreens chief financial officer James Kehoe said at an investor call in January when asked about shrinkage. “We’re stabilized,” he added, saying the company is “pretty happy with where we are.”

Still, law enforcement and retailers insist organized retail crime remains a problem and said they stand behind their data.

“I can tell you that in our world we know that crime is on the rise. We see it in our stores every day,” Scott Glenn, Home Depot’s vice president of asset protection, told CNBC. “Our internal information shows us that the year after year is growing double digits.”

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