Walgreens put more merchandise in locked display cases to offset theft. Sales declined, the retailer says.
That's a likely result as an increase in asset protection usually leads to a dip in sales, says consulting firm McKinsey & Company. And that's what Walgreens faced, too.
Walgreens Boots Alliance Inc. CEO Timothy Wentworth said during a Jan. 10 call with investment analysts putting more products in locked display cases "does impact how sales work through the store because when you lock things up, for example, you don't sell as many of them. We've kind of proven that pretty conclusively."
As for theft, Walgreens' asset protection team is looking at "creative things" to address "the customer experience on shrink," Wentworth said. "I don't have anything magnificent to share with you today."
Walgreens did not offer examples of products it was putting in display cases when asked by USA TODAY.
Walgreens' sales increased thanks to pharmaceuticals
Walgreens said sales increased 7.5% to $39.5 billion in the first quarter of fiscal 2025, which ended November 30, 2024, in its quarterly financials, released last week.
Driving that result? A 12.7% increase in comparable pharmacy sales, which rose due to higher prices on branded drugs and more prescriptions filled, the company said.
However, comparable retail sales fell 4.6%, with lower sales in discretionary categories and a weaker cough cold flu season, Walgreens said.
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Walgreens plans more store closures
Also as part of its turnaround plan, Walgreens plans to close about 1,200 stores, with about 500 to be closed in the company's fiscal year 2025, which ends in August 2025, Walgreens said in October.
The company closed 70 stores in its first quarter of fiscal 2025, which ended November 30, 2024, Wentworth said during Friday's call. Walgreens plans to close about another 450 stores through the end of 2025, he said.
Retail shrink and crime among 'top challenges'
“Shrink,” a retail industry term for lost inventory including shoplifting, drove $112 billion in retail losses in 2022, up from $94 billion in 2021, according to the National Retail Federation.
And shoplifting isn't slowing down. Retailers reported a 90% increase in dollar loss due to shoplifting in 2023, compared to 2019, in a more recent NRF report released in December 2024. The average number of shoplifting incidents rose 93% during that time, the trade group said.
Beyond shoplifting, there's increased risk of organized retail crime, which can rise to the level of multimillion-dollar retail crime operations. "Retail crime is one of the top challenges facing our industry today," Walgreens media relations director Marty Maloney said in a statement to USA TODAY.