In a recent interview with CNBC, Walmart CEO Doug McMillan delivered a sobering message about the rising tide of theft plaguing the retail giant. McMillan didn’t mince words when he stated that if the current trend of shoplifting doesn’t abate, Walmart may be forced to shutter stores nationwide.
“Theft is an issue,” McMillan declared, emphasizing that the problem has escalated beyond historical norms. He painted a grim picture of the consequences: “If that’s not corrected, over time, prices will be higher and stores will close.”
The scale of the problem is staggering. The world’s largest retailer is estimated to lose approximately 1% of its U.S. revenue annually due to theft. This translates to a whopping $3 billion yearly stolen by customers and employees. These figures, reported by Routers in 2015, underscore the magnitude of the retail behemoth’s issue.
McMillan’s approach to combating this epidemic of theft is rooted in collaboration. He stressed the importance of Walmart working hand-in-hand with local law enforcement agencies. The CEO highlighted the need for these agencies to be adequately staffed, suggesting that a strong police presence could deter would-be thieves.
Interestingly, McMillan refrained from divulging specific figures regarding Walmart’s theft-related losses for the current year. Instead, he emphasized the localized nature of the problem, stating, “It’s city by city, location by location.” This approach suggests that Walmart is taking a nuanced view of the issue, recognizing that theft patterns may vary significantly across different regions and stores.
The CEO praised the company’s relationships with local law enforcement, describing them as “great… for the most part.” This collaborative strategy is at the heart of Walmart’s anti-theft efforts, with store managers working closely with police to address the problem at a grassroots level.
However, Walmart isn’t alone in its struggle against shoplifting and organized retail crime. Target, another retail giant, has also been grappling with significant losses due to theft. The company reported that missing inventory had taken a substantial bite out of its gross margin, reducing it by over $400 million in 2022 compared to the previous year. Even more alarmingly, Target anticipates these profit losses to balloon to $600 million by the end of the fiscal year.
Target’s Chief Financial Officer, Michael Fike, didn’t hold back during a November earnings call, placing the blame squarely on organized crime. “We’ve seen a significant increase in theft and organized retail crime across our business,” Fike stated, echoing the concerns of many in the retail sector.
Target’s CEO, Brian Cornell, echoed McMillan’s warning about potential store closures and price hikes if the theft situation doesn’t improve. This messaging alignment from two of the country’s largest retailers underscores the severity of the industry’s issue.
Despite these challenges, it’s worth noting that Walmart has thus far avoided initiating any long-term, widespread store closings. This resilience in mounting losses is a testament to the company’s size and resources. Still, it also raises questions about how long a retail giant like Walmart can absorb such significant financial blows before taking more drastic action.
As the retail landscape continues to evolve, theft looms large. The warnings from industry leaders like McMillan and Cornell are a stark reminder of the delicate balance between profitability and accessibility in the retail sector. If left unchecked, the rising tide of theft could reshape the retail landscape, potentially leaving consumers with fewer options and higher prices. The coming months and years will likely determine whether retailers and law enforcement can turn the tide against this wave of organized crime and petty theft.