Organized crime plagues retailers, sparking debate

America’s largest retailers say organized retail crime has become a multibillion-dollar problem, but the effectiveness of their strategies to address it and data validity generally questioned.

Over the past few years, companies such as Home Depot, Lowe, walmart, Best Buy, walgreens And CVS are sounding the alarm about organized groups of thieves who ransack their stores and resell goods in online marketplaces.

They invested in theft prevention strategies like plastic crates, metal detectors, motion sensors and AI cameras and warned that if the problem doesn’t improve, consumers could end up paying the price.

“Theft is a problem. It’s higher than ever,” 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 as obvious as it seems to retailers and trade groups.

Research by the National Retail Federation shows a decline in retail sales. cost retailers $94.5 billion. in 2021 compared to $90.8 billion in 2020but the data is mostly qualitative and cannot be fact-checked as it comes from an anonymous group of retailers.

In addition, the $94.5 billion loss relates to the overall drawdown, which is the difference between the inventory a company records on its balance sheet and what it can actually sell. This difference takes into account items that were stolen from the store, but also includes items that are damaged, lost, or stolen by employees.

External retail crime accounts for only 37% of these losses, or about $35 billion, according to NRF.

At least one major retailer recently admitted that they may have exaggerated the problem.

“Maybe we cried too much last year,” Walgreens chief financial officer James Kehoe said during a call with investors in January when asked about the cuts. “We have stabilized,” he added, saying the company is “quite happy with where we are.”

However, law enforcement and retailers insist organized retail crime remains a problem and say they stand by their data.

“I can tell you that in our world we know that crime is on the rise. We see this every day in our stores,” Scott Glenn, Home Depot vice president of asset protection, told CNBC. “Our inside information shows us that this is year on year and growing at a double digit rate.”

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