In an investor call this past January, Walgreens CFO James Kehoe stated his company’s retail shrink–the industry terms for loss due to shoplifting–rose 40% to 50% “over the last two years.” Kehoe went on to state that Walgreens was then currently experiencing a “52% increase in shrink.” Social and news media were awash with footage of people brazenly shoplifting from stores. Anti-reform advocates used statements like Kehoe’s and those videos to push back against progressive prosecutors and legislation like bail reform. Even Democrats, like then NYC Mayoral Candidate Eric Adams, embraced the narrative that crime was rampant and needed to be forcefully dealt with.
At the same time, criminal legal system researchers and advocates suggested that it was important to wait for the data to come in before enacting sweeping policy changes. And yesterday we got an excellent example of why that’s important. In another call with investors, Kehoe announced that Walgreens shrinkage in 2022 represented 3.5% of sales last year and is most likey currently in the “mid twos.” He followed that up with the following statement:
“Maybe we cried too much last year,” Kehoe said. “We’re stabilized,” he added, saying the company is “quite happy with where we are.”
https://www.cnbc.com/2023/01/05/walgreens-may-have-overstated-theft-concerns.html
Granted, this is a single data point. And we need to wait for additional data to be released from other retailers to see if constitutes an industry-wide trend. Still it’s a demonstration of why it’s important to wait for additional data.
Another thing worth noting in Kehoe’s comments is that “common sense” solutions don’t always work as planned. For example, in response the assumption that retail theft was out of control, Walgreens increased the amount of store security. However, once they looked at the data, it didn’t appear that has any impact:
Kehoe said the company has spent a “fair amount” to crack down on the thefts but acknowledged the private security companies they’ve hired have been “largely ineffective.” These guards can do very little but call law enforcement or hold a suspect until police arrive.
https://www.cnbc.com/2023/01/05/walgreens-may-have-overstated-theft-concerns.html
As always, it will be interesting to see the degree to which Kehoe’s latest comments are covered by the folks who had used his previous words to argue against reform. My suspicion is that like most counterfactual data it will be at best waived away. But then again, they never have been great at following up on sensational stories. For example, a lot of folks forwarded the video of someone shoplifting in broad daylight from a San Francisco Walgreens as proof that the city was ignoring crime. Far fewer followed up to share that the individual in that video was arrested, convicted of “felony grand theft,” and incarcerated.
Addendum: Via twitter I just learned about this excellent article at The Atlantic by Amanda Mull on the difficulty of determining if there was a major surge in shoplifting. If you are interested in this topic, I highly recommend reading it.
