You can't shoplift from Amazon because the consumer has no access to the company's merchandise. The retail giant takes orders digitally, picks and packages those items, and then ships them to customers.
Someone might steal your package from your door, but no regular consumer can walk through an Amazon (AMZN) warehouse and steal a bunch of merchandise. Walmart and Target (TGT) don't have the same luxury. Both retailers have been struggling with rising theft from their stores.
DON'T MISS: Costco Gives Members a Surprise Gift
Target CEO Brian Cornell talked about theft during his chain's first-quarter earnings call.
"Beyond macroeconomic challenges, we continue to contend with significant headwinds caused by inventory shrink, building on a worsening trend that emerged last year," he said. "While shrink can be driven by multiple factors, theft, and organized retail crime are increasingly urgent issues impacting the team and our guests and other retailers. The problem affects all of us, limiting product availability, creating a less convenient shopping experience, and putting our team and guests in harm's way."
Cornell, who noted that "violent incidents are increasing at our stores and across the entire retail industry," shared some of his company's efforts to solve the problem.
"We are engaged in a variety of mitigation efforts, which begin with significant resource investments to protect our team and our guests. In addition, we're installing fixtures to protect merchandise and adjusting our assortment in affected stores," he said.
Walmart CEO Doug McMillon has publicly spoken about the same issues as Cornell
Image source: TheStreet
Walgreens May Have the Answer
Cornell made it clear that theft isn't a minor annoyance, it's causing real issues for the retailer.
"Beyond safety concerns, worsening shrink rates are putting significant pressure on our financial results. More specifically, based on the results we've seen so far this year, we expect that shrink will reduce our profitability by more than half a billion dollars compared with last year," he said.
Walgreens (WBA) has launched a prototype store that changes the shopping experience in order to eliminate theft. This new store has only two aisles of "essentials" that shoppers can put into their carts, according to a report from CWB Chicago.
All the other merchandise in the store is locked up with customers using kiosks to order what they need. Walgreens has framed this via signs encouraging people to let the store's employees shop for them. In addition, shelves in the store are only about five feet high, making it easier for customers to see the merchandise (and easier for store employees to keep tabs on the customers.
Is Walgreens' Solution Too Extreme?
Walgreens has essentially created a digital experience that you have in person. It's easy to see how the company could integrate app-based ordering and advance ordering in addition to the kiosks, but this might be taking things too far in order to prevent theft.
"Walgreens’ new store concept will reduce theft and divert shoppers to e-commerce, especially for intimate items. Other chains will likely monitor Walgreens’ results before imitating this concept. Manual picking by store staff may reduce shoplifting, as well as productivity and morale," B2B Content Strategist Lisa Goller commented on Retailwire.
Global Data Managing Director Neil Saunders thinks that Walgreens may have gone too far.
"It may stop theft but it certainly doesn’t facilitate shopping," he said.
"It’s annoying and cumbersome," he commented on the website's story.
But, while this solution may be too extreme, the retailer may learn some lessons that help it find the right mix for its stores.
"That said, it is better than the approach of locking things away and having to call staff over to retrieve items. I guess it also beats having a store close completely. I have every sympathy for retailers suffering the impact of theft, but inconveniencing honest customers isn’t really the answer," he added.
