Inventory shrink is a broad category, referring to all the losses that retailers suffer due to mistakes, employee fraud, and consumer theft. Naturally, it is a serious concern for every retailer; any losses of products mean a loss of profits. But that concern has grown to unprecedented levels, driven mainly by massively increasing rates of theft by well-organized crime rings that target local stores. Estimates indicate that such theft leads to retail losses of approximately $100 billion.

For retailers stores, theft is both an economic and a human resources concern, especially as the crime turns increasingly violent. At Home Depot for example, two employees died during the course of violent theft attempts in just one recent year. Walmart notes that for certain stores, particularly subject to theft risks, annual losses have doubled in the past five years, reaching tens of millions of dollars in each case.

In response to these terrifying and growing threats, various retailers are taking different approaches. Walmart has closed scores of stores that were most prone to being robbed. Such a move harms both the retailer and the communities it serves, many of which lack broad access to other retailers. But continuing to lose millions across multiple stores was unsustainable.

In one location though, Walmart has decided to try a novel design-based solution: locating a police substation in the store, next to the pharmacy, bakery, and meat departments. This Atlanta-area Supercenter location previously had had to be closed after an alleged arson attach; when it reopens, it will be a smaller Neighborhood Market and will maintain a regular police presence. The goal of this design is to reassure law-abiding shoppers and employees, discourage theft attempts, and also support police officers by giving them an alternative location to take breaks and recharge their equipment.

Home Depot notes that it has no intentions thus far of closing stores, but it has put more items in locked cases to mitigate theft attempts. Various retailers have long used such cases for their highest ticket items, but Home Depot is moving lots more products behind lock-and-key, including not just generators and power tools but also circuit breakers. Although it does not house police officers, Home Depot has hired more security guards, added lighting to parking lots, and installed more recording devices throughout stores.

The individual retailers are not totally on their own though. The Congressional INFORM Consumers Act, passed in 2022, requires online resellers to verify the source of products being sold on their sites. This effort acknowledges that, for well-organized crime rings, online sales provide a relatively easy means to unload the stolen goods. If regulations can shut down such channels—which requires collaboration among online sites, retailers that can identify stolen items being listed, and consumers who avoid clearly unethical sales of stolen goods—the incentive to engage in the violent crime should diminish.

Discussion Questions

1. What else can retailers do to address the rash of organized theft that threatens them and their employees?
2. If you were working at a retail store, and a crime ring attempted to rob it, would you stay on the job?

Sources: Jena Warburton, “Walmart Makes a First-Ever Change to Prevent Crimes in Superstore,” The Street, September 6, 2023; Bethann Moorcraft, “‘This Isn’t a Random Shoplifter Anymore’: Home Depot CEO Warns Retail Theft Is a ‘Big Problem’ as the Chain Bolsters Store Security—Even on Small Items,” Moneywise, September 10, 2023; National Retail Foundation, “Organized Retail Crime: An Assessment of a Persistent and Growing Threat,” April 2023, https://cdn.nrf.com/sites/default/files/2023-04/NRF-K2OrganizedRetailCrimeReportFinal.pdf