Are Shrinkages Ballooning, or is Tech puncturing Shrinkages?

Recently Walmart CEO Doug McMillon said on CNBC that his company's stores are seeing significantly higher theft. Target Chief Financial Officer Michael Fiddelke was quoted in the same article as saying that shoplifting jumped about 50% year over and year, causing about $400 million in losses in the fiscal year. However, Walgreens' global Chief Financial Officer James Kehoe indicated recently that perhaps Walgreens "cried too much last year"....as shrinkage at Walgreens recently was about 2.5-2.6% of sales, down from 3.5% in 2022. The USA Today article writes that "the median retail shrink percentage was 1.2% in 2021, the same as in 2016, according to the NRF’s 2022 retail security survey."

One question that is being asked is whether increasing use of self-checkouts by retailers is contributing to higher shrinkage. This Atlantic article, "The Banana Trick and Other Acts of Self-Checkout Thievery" is an interesting, albeit depressing, read about the tricks some people are using to avoid paying the "right" price... while retailers are partnering with tech companies and using AI / Data Analytics to reduce theft...

Retailers are increasingly emphasizing online ordering. Is it in the retailers' best interest to encourage online ordering combined with in-store pickup or delivery to home? This could reduce shrinkage and also reduce the store footprint, but what adverse effects might this have on the top and bottom lines? Interesting times ahead...

It is also interesting to note: when retailers reduce the size/quantity of a product while keeping the price constant (or even making it higher) it is called Shrinkflation- perfectly legal and a well-accepted tactic, which might be regarded as one of the slippery marketing tactics...

#retail #shrinkage #tech #AI #shrinkflation