Home Business Organized crime is plaguing retailers and fueling debate

Organized crime is plaguing retailers and fueling debate

by SuperiorInvest

America’s largest retailers say so organized retail crime has grown into a multi-billion dollar problem, but the effectiveness of their strategies to address it and data validity overall they came into consideration.

In the last few years, companies such as Home Depot, Lowe’s, Walmart, Best buy, Walgreens and CVS they are sounding the alarm about organized gangs of thieves looting their stores and selling goods on online marketplaces.

They poured money theft prevention strategysuch as plastic cases, metal detectors, motion-sensing monitors and AI-powered cameras, and warned that if the problem doesn’t improve, consumers may end up paying the price.

“Theft is a problem. It’s higher than it’s been historically,” Walmart CEO Doug McMillon said. he told CNBC in December. “If this is not corrected over time, prices will be higher and/or stores will close.”

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

Studies from the National Retail Federation show that retail is shrinking cost retailers $94.5 billion in 2021, from $90.8 billion in 2020but the data is largely qualitative and cannot be verified because it is collected from an anonymized group of vendors.

Additionally, the $94.5 billion loss refers to total write-downs, meaning the difference between the inventory the company records on its balance sheet and what it can actually sell. This difference includes items that have been stolen from stores, but also includes inventory that has been damaged, lost, or stolen by employees.

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

At least one major retailer recently admitted that it might overstated the problem.

“Maybe we cried too much last year,” Walgreens CFO James Kehoe said on an investor call in January when asked about downsizing. “We’re stabilized,” he added, adding that the company is “quite happy with where we are.”

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

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

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