The CEO of Walgreens admitted that locking down items to prevent shoplifting hasn’t worked — and that he will close stores instead.
Not only did this practice not curb theft, it significantly affected sales.
In recent years, major retailers like Walgreens, CVS, Walmart and Target have increasingly resorted to locking up everyday items such as toothbrushes, deodorant, laundry detergent, coffee and even milk.
This practice has led to frustration among customers, with many complaining about the inconvenience of waiting for an employee to release basic necessities.
During an earnings conference call Friday, Walgreens CEO Tim Wentworth made a surprising admission.
Despite these measures, the company reported a 52 percent increase in “shrinkage,” the retail term for inventory lost to theft.
“When you lock things up…you don’t sell as many.” We kind of proved it pretty conclusively,” Wentworth admitted.
Instead, Wentworth said the company will have to look for “creative” solutions to combat the “hand-to-hand battle” that is shoplifting.
But for now, Walgreens appears to be tackling the problem by closing stores in areas most affected by the thefts.
Walgreens is increasingly locking everyday items behind glass to deter shoplifters. But it also impacts sales
Walgreens is expected to close a total of 1,200 stores nationwide by 2027.
Two Walgreens locations in Oakland are expected to close at the end of February, the company announced.
This comes after the company announced it would close a dozen locations in San Francisco.
Another previously announced Oakland location will close next week, followed by a fourth on January 30.
A Walgreens in Richmond is also scheduled to close on January 30.
Wentworth told investors the closures were part of the company’s overall plan to focus on health and wellness.
This “retail pharmacy-led turnaround” will include reducing the number of stores while expanding its sports nutrition, superfood and private label offerings.
Walgreens plans to close another 450 of its underperforming stores this year and a total of 1,200 stores nationwide by 2027.
Wentworth argued that the pharmacy chain is seeing improvements in other areas such as digital check-in for pharmacy patients.
Walgreens CEO Tim Wentworth says locking items to prevent shoplifting hasn’t worked
“While we have much work ahead of us, this progress strengthens our belief in achieving a successful recovery,” he said Friday.
The pharmacy chain has struggled financially for several years due to sluggish consumer spending and low drug reimbursement rates.
Wentworth unveiled a series of changes last year, hoping to turn around the struggling pharmacy chain.
“Our retail pharmacy business is at the heart of our future business strategy. However, increased regulatory and reimbursement pressures are straining our ability to cover costs associated with rent, staffing and supply needs,” Maloney told SFGate earlier this month.
Maloney added that “as many employees as possible” will have the opportunity to transfer to other stores, and that customers’ prescriptions will be transferred to nearby stores with the intention of contacting customers for more further information.
Wentworth previously revealed that about a quarter of Walgreens’ 8,600 stores were performing poorly in the United States.
“It’s never an easy decision to close a store,” Wentworth said previously.
“We know that our stores are important to the communities we serve and are therefore doing everything we can to improve their performance.
“When closures are necessary, like those in San Francisco, we will work in partnership with community stakeholders to minimize disruption to customers.”