Walgreens Executive Says Shoplifting Threat in San Francisco Was Overstated | Hacker News Reader

Walgreens Executive Says Shoplifting Threat in San Francisco Was Overstated

nytimes.com

71 pointsjrochkind152 comments

I haven’t seen it widely reported, but Walgreens claimed they lost money due to “crime”. In financial statements they clarified that meant the several billion dollar fines they had to pay due to some combination of (1) the opioid settlements (2) illegal wage theft against their employees. Stolen merchandise wasn’t a big contributor to bottom line.

They lost money due to white collar and labor crimes, while throwing places like SF under the bus for news cycles and talking points.

SF the city challenged Walgreens on the theft issue, since the police don’t have many reported thefts from Walgreens in the city. Which is a pattern. The clothing store that was reported to close after crazy amounts of crime quietly opened its SF branch a few days later (with free Police guards and press cycles).

https://qz.com/walgreens-opioid-settlement-cost-loss-first-q...

https://abc7news.com/cotopaxi-san-francisco-reopens-founder-...

Hung-Chung Su, an associate professor of operations management at the University of Michigan-Dearborn, said that while Mr. Kehoe spoke positively about the decrease in theft, 2.5 percent shrinkage is still a problem for the company. Based on Dr. Su’s research, retailers rely too much on technology to prevent theft. “If you really want to reduce retail shrinkage or retail theft, it ultimately comes down to the employees,” Dr. Su said. “But during the pandemic, the employee turnover at retail stores increased. People found better jobs, better-paying jobs.”

Also most chains make it policy that staff can’t intervene. There was a viral story some years back where a woman working loss-prevention at Best Buy prevented a thief from getting out of the store with stolen goods only to be fired. There was a more recent video where nearly the whole sales floor at a Best Buy banded together to stop snatch-and-grab thieves. The Internet loved it, but it was expected they’d all eventually get fired as well.

This is a good thing. Companies reap the benefit of loss prevention actions, they should also have to face the liability when things go wrong.

Best Buy has staff that absolutely can stop shop lifters, just not in all stores at all times. Why? Because those employees require special training to do so safely, and companies know it is cheaper to let people steal than provide that training to all employees.

The incentives are properly aligned. If a company could force their employees to intervene with no training and no regard to potential harm to the employee, they would all do so.

This is bean-counter logic, due to insufficient data.

How do you quantify the value of a neighborhood that is intolerant of theft vs one that is tolerant?

If untrained staff intervene in a theft, they could die. Valuing human life over a tiny amount of corporate profit is not "bean-counter logic".

If community impact is a concern, then the company should dip into their profits to properly staff their stores. They shouldn't be able to demand their employees to get shot or stabbed.

> If untrained staff intervene in a theft, they could die. Valuing human life over a tiny amount of corporate profit is not "bean-counter logic".

1. “Trained” staff can also die. 2. What are the chances they will die?

> If community impact is a concern, then the company should dip into their profits to properly staff their stores. They shouldn't be able to demand their employees to get shot or stabbed.

This is a strawman. The topic is about employees intervening on their own and getting fired for it, not the company demanding that they intervene.

Nobody here is saying a business has the right to tell regular employees to intervene.

> 1. “Trained” staff can also die.

So why do companies let any staff intervene? Because with traning, the risk is reduced to the point where it is worth it. Also, there might be fewer liabilities. You might be able to insure against harm to a trained employee.

> 2. What are the chances they will die?

Obviously high enough that companies don't want to risk it. They could be injured as well.

> Nobody here is saying a business has the right to tell regular employees to intervene.

If companies do not have to accept liability for loss prevention mishaps, they will compel untrained employees to intervene. There will be an obvious gain (less theft) and no cost (liability gone).

These companies run on "bean-counter logic". They're going to make the numbers go up if they can.

This makes sense until an employee gets shot defending a $25 bottle of detergent

Okay, but why do wage-employees intervene?

What is their motivation even when company policy states otherwise?

The wage employee is typically not super well off and it's much more personal to see a lowlife get ahead by cheating when you're poor. I think people get a lot more upset about cheats when they're barely making it by doing things the honest way.

Their motivation is personal and not rational. Some employees emotionally identify their workplace as their home, and their bosses like parents, so they do what they might do if someone stole from their home. Other workers incorrectly believe they will be rewarded for stopping a theft. Other workers just need an outlet where it’s socially acceptable for them to engage in greater-than-usual controlled violence against another person. Other workers just via personal morals feel that all theft should be stopped regardless of the rules/rewards. Other workers panic and don’t know what they should do in the case of shoplifting and then react chaotically/instinctually.

The cost to the company of a single employee injury or death sustained while stopping a shoplifter is probably equivalent to hundreds of single-person personal thefts. Even if there’s never any workers l-comp-esque payouts, the hours of administrative time spent reviewing and investigating the incident probably costs more than a dozen thefts.

Hypothetically (not saying it's justified):

You have one store where employees don't stop thieves.

You have another store where thieves are stopped by security and those who are caught have their hand chopped off.

A couple questions: 1) Is theft reduced 2) If theft is not reduced, does theft at least decrease at handless-thief store in favor of store that does nothing.

It's not hard for me to imagine that having say a hand chopped off even once can lead to hundreds of less thefts at a store.

My humble conjecture. Not saying hands should be chopped.

> Shrinkage can also be attributed to product damage and loss of goods, theft by employees and vendor fraud.

I'm not sure what Dr. Su was referring to when they said "it all comes down to employees," it might not be stopping theft from the public. Internal theft obviously is about employees, and product damage and to some extent vendor fraud are also things more obviously effected by employees.

I think it’s fair that clerks shouldn’t go after shoplifters because that’s unnecessary risk. But, don’t stores usually have security guards that take that role? That’s how it is in my country.

In Paraguay there is a guy standing outside the bank and a few other venues with a shotgun. When the person steals he turns them into a hamburger.

May not be a great form of justice or ensure a fair trial, but it seems to work remarkably well.

Here in the US stores usually have an "Asset Protection" team that ostensibly serves the same purpose, but they seem to mostly be focused on tracking loss and let the cops do the dangerous part (catching shoplifters)

>2.5 percent shrinkage is still a problem for the company

2.5 percent shrinkage is a COMPLETELY NORMAL level of shrinkage, for like decades. Getting something like 1 percent shrinkage would likely get you noticed by the upper management of your company.

Why not simply put up a turn stile for entering the store, combined with facial recognition to keep out people previously caught stealing on surveillance cameras.

It would be kind of dystopian, and I wouldn't feel like shopping such a place.. But then again, shopping at a place where toothbrushes are locked away also feels weird.

I'm not saying it's the future I would want. But it does seem a bit attractive to keep people from stealing twice.

I call BS on this article. I'm an SF-grown left-leaning SJW type, and this seems like propaganda to me.

Yes, the exec said, “Maybe we cried too much last year,” but that's all he said. If you listen to him in full, instead of taking one phrase out of context, it's clear that he's not making some big admission or anything like that.

> It was a remarkable admission, retail experts said.

Which experts?

- - - -

I've lived here all my life, nearly half a century now, and things have never been like this. There are tent cities, people shooting up in the Muni stations and on the street, actual human feces on the sidewalk. The Tenderloin in particular has become a lawless zone, even the longtime residents are scared.

This town has always been nuts, and even a little dangerous, since the Gold Rush, but at least it was fun. What we're seeing today is dystopian.

If the Progressive bloc can't see their own problems they're not going to be able to make, uh, progress. Progressives insist that the recall of Boudin was all due to Republicans and the Police, they ignored democrats and particularly the Asian-American political bloc and told us that we were tricked by the nasty R's and the lying police! (Asian American political groups in SF were against Boudin because they believed he was soft on anti-Asian hate crime in the wake of the pandemic & lockdowns. A lot of Democrats just felt that he wasn't able to do his job. Some of that because the rank-and-file cops didn't like him, but mostly because he was kinda nuts.)

- - - -

Anyway, two things can be true: Walgreens overestimated and overstated how bad shoplifting was, and shoplifting and crime is a big problem in SF right now.

How many Republicans are even in SF? LA runs political ads blaming Republicans for everything bad around here, but there aren’t Republican politicians. There are only Republican voters…. At some point the argument starts to look ridiculous.

https://www.sfelections.org/tools/election_data/

    Registration by Party
    ...
    Democratic 317,109
    Republican  33,778

So D's outnumber R's here by roughly 10:1.

Interestingly:

    No Party Preference/Unknown 133,810

Yeah, it's at least the third time I've seen this same article on HN in the past couple of weeks. Walgreens is only walking it back because their additional anti-theft measures are costing them in expenses and lost sales, not because theft isn't actually a problem.

Agree. The quote is a great headline, but I read it to be to say they overstated the need and effectiveness to hire security: "We’ve put in incremental security in the stores in the first quarter. Actually, probably we put in too much. We might step back a little bit from that."

It's like realizing that the current state of individual recycling may not be the most effective solution, and then twisting it into an climate change denial.

Or you can read their actual public reports and see that their shrinkage is perfectly in line with other companies.

Their overall shrinkage is in line after they closed stores and put in counter-theft measures. It doesn't say anything about whether they need to further close stores in such areas, or whether mom-and-pop stores can survive in the same areas.

A different two things can also be true -- there might be, as you suggest, problems with: "tent cities, people shooting up in the Muni stations and on the street, actual human feces on the sidewalk. The Tenderloin in particular has become a lawless zone, even the longtime residents are scared."

And at the same time, shoplifting losses might not be significantly different for Walgreens or other stores than typical trends, and the stories about widespread organized crime shoplifting might have been overblown.

People still in HN threads like to point to the "shoplifting problem" specifically when talking about crime being out of control or former DA Boudin not doing his job, and use Walgreens specifically as their evidence. If Walgreens says in fact shoplifting wasn't all that unusual...

There is a transcript of the earnings call available and linked to in OP, if you want to see exactly what the Walgreens exec said about it (that "shrink" losses are now "well below the prior-year levels."). https://www.fool.com/earnings/call-transcripts/2023/01/05/wa...

> A different two things can also be true

You list the same two things I did..?

I am saying perhaps shoplifting is not in fact any worse than typical trends, as Walgreens suggested for their stores.

In arguments I've seen on HN, people get really excited about shoplifting, especially in relation to Boudin, and use Walgreens as their evidence. If Walgreens isn't that evidence... maybe there is not unusual shoplifting going on? Even if there are other problems.

> I am saying perhaps shoplifting is not in fact any worse than typical trends, as Walgreens suggested for their stores.

That's what I said too, "Walgreens overestimated and overstated how bad shoplifting was". Anyway, it's not important.

- - - -

> In arguments I've seen on HN, people get really excited about shoplifting, especially in relation to Boudin, and use Walgreens as their evidence. If Walgreens isn't that evidence... maybe there is not unusual shoplifting going on?

Counter-propaganda is still propaganda.

I want "my side" (to the extent that I'm not apolitical I'm left-leaning by USA standards) to do better than the opposition. We don't need propaganda because we've got truth on our side! (In case it's not clear that was meant tongue-in-cheek.)

> maybe there is not unusual shoplifting going on?

It would be nice to know. I wish NYT had printed that data.

I see what you mean. Some actual reporting on this would be welcome. It is rare to get actual reporting these days, like looking into the overall shoplifting statistics in a serious way, instead of just printing what someone said in a press release or earnings call. Journalism is not what we'd like.

I still think it's news to report when a Walgreen's exec says in an earnings call "Yeah, maybe shoplifting wasn't actually that bad and we over-reacted", when the shoplifting issue, at Walgreen's specifically, has become such a talking point to represent the overall situation. Even just on it's own, I think it's news, and don't think it's just propaganda to report it in the way NYT did.

But I get what you mean, I agree that I wish more people more often were interested in getting to what's really going on, instead of just finding talking points to support whatever they believe or find convenient for their agenda.

I think "Oh, that Walgreens situation was not, according to Walgreens, what people are saying it was" is one point that is not irrelevant in doing that though. But yeah, it's not the full picture, it's just one data point (or, anyway, removing one data point from the previous picture).

You establish there's shit on the street, then seem to assume that proves there's also theft. Why does this sort of comment always conflate people sleeping in the street with theft and general lawlessness?

Simply because things are a little unpleasant for you doesn't necessarily mean there has to be a real problem here.

Well, like I said, I've seen it for myself. E.g. some folks broke into the house across the street and were squatting. My sister's car got broken into and some stuff stolen.

You don't remember the decades when SoMa and the mission were gang hotspots, with frequent shootings? During that same time, it was dangerous to wear a hoodie, or a bandana. Crime in SF is still at historic lows, especially violent crime. There's a higher perception of crime in the city right now due to a persistent media emphasis on crime _percentage_ increases. The police haven't been defunded, the DA's office is still prosecuting roughly the same number of criminals.

The biggest different in SF is the homeless population, and specifically the amount of drug addicts. Drug addicts are also the ones breaking into cars, shop lifting and stealing bikes. This is primarily thanks to the opiod epidemic, and not due to local politics. Republican cities are _not_ handling this better than liberal ones.

The tenderloin has always been awful. It's named the way it is because of high crime and dirty cops. You describing it this way makes me doubt you live in the city at all.

It's been a year since Boudin was recalled, and yet you're saying it's the worst it's ever been. Maybe he wasn't the issue?

> You don't remember the decades when SoMa and the mission were gang hotspots, with frequent shootings? During that same time, it was dangerous to wear a hoodie, or a bandana.

Oh I do. When I was a kid the rule was "Don't wear Adidas sneakers on the Muni, you'll get robbed." (Also Nike.)

We mostly hung out in the Sunset and my clique was multi-ethnic, so we had to watch out for SDI (the Sunset District Incorporated, skinheads) when we hung out in Stern Grove in the middle of the night.

The thing about gang violence is that it's mostly between gang members.

> Crime in SF is still at historic lows, especially violent crime. There's a higher perception of crime in the city right now due to a persistent media emphasis on crime _percentage_ increases.

I think the perception is due to, well, perception. Not to be snarky, what I mean is you see it everywhere, the kinds of crime that are common today. I mentioned in a sib comment that I've seen squatters break into a house across the street, and my sister's car had a window broken and things stolen from it. This has never happened before and we've lived here for about 25 years. (Park Merced.)

You can literally go downtown and see people shooting up in the gutter, or step over the human feces yourself. Downtown has always been scuzzy (at least since I was a kid) but it's getting medieval down there. Go look for yourself if you don't believe me. Just be careful.

> The biggest different in SF is the homeless population, and specifically the amount of drug addicts. Drug addicts are also the ones breaking into cars, shop lifting and stealing bikes. This is primarily thanks to the opiod epidemic, and not due to local politics. Republican cities are _not_ handling this better than liberal ones.

First of all this should not be a partisan issue I don't care about Left vs. Right when it comes to housing the homeless and treating addiction. I was homeless myself for a few years, and I've seen first hand how addiction warps people.

Second, yeah, addicts steal. They need help: stable, supportive environments (and in some cases access to substitute drugs or whatever, I don't want to get into the details of humane treatment for addicts here. I'm not an expert anyway.)

SF spends a quarter of a billion dollars per year on homelessness. Most of it goes into the pockets of people who are not themselves homeless. So on the one hand, homelessness and drug addiction should not be treated as crimes, and folks with those problems should get the help they need, while on the other hand, leaving them on the street without support to steal and take drugs is not humane.

Third, do you have data? I haven't been out in the street for a couple of decades, so my first-hand data are pretty stale. If we're going to discuss this we should do it with actual data please.

> The tenderloin has always been awful. It's named the way it is because of high crime and dirty cops. You describing it this way makes me doubt you live in the city at all.

My man, I lived in the Tenderloin for a bit in my twenties. It has always been a rough neighborhood (highest incidence of male-on-male rape in the country. Dubious distinction to put it mildly.) But it functioned for its residents. Now it's gotten so chaotic that even the dirty cops won't go in there.

> It's been a year since Boudin was recalled, and yet you're saying it's the worst it's ever been. Maybe he wasn't the issue?

Well that's the argument I made to my Progressive friends (the ones who told me to my face that the R's and the lying police bamboozled me): the police said they couldn't work with him, so now if crime doesn't go down significantly it will show that he wasn't actually the problem after all, like you say.

The recall might be a setback for the Progressives, but it was a Pyrrhic victory for the Right.

From my POV the Progressives biggest problem right now is that they have their heads up their behinds when it comes to selling their policies to the middle-Left, aka the 317k D's and the 134k undecided voters of the City.

https://archive.ph/MLegV

So everything is totally fine? I guess things in SF must be better than Seattle.

...are "the city is burning down" and "everything is fine" the only states you think of?

"Overstated" doesn't mean everything's fine, it means that it wasn't as bad as they made it out to be.

Well i didn’t say “The city is burning down” but now that you say it I kinda like it. Fentanyl fuels filch fire in filthy San Fran.

The fact that I have to pay $4 for a gatorade says otherwise

That’s because San Francisco is expensive. A sandwich with no sides at many places downtown is more than $10 and I’m pretty sure it’s not organized shoplifting…

You pay $4 for a Gatorade because of how expensive the labor (store staff) and rent are. San Francisco would be much cheaper if it didn’t cost 5 grand a month to rent a tiny store front.

You think it only costs 5k?

This. My barber rents about 600 square feet in Boston near a major college, and that is $8000/mo. And that’s a good deal considering both the area and that he’s always had so much business he’s forever booked solid.

Folks, actually go look into how much commercial retail (not office space!) real estate costs in the nice, busy parts of your area. It’s an eye opener. Food service is even more. Then NYC (especially!), SF, DC, Seattle and Boston can be positively withering.

Then remove the plastic cases protecting all of the aisle items in the store.

Or, the threat was overstated because the product was protected. Don’t hold your breath for a trend reversal in SF.

Until the plastic results in loss of sales because people don’t want to bother, we probably won’t see it reversed. The cost is sunk. Why wouldn’t they leave it, even if ineffective, as long as it doesn’t cost them anything?

Stores have thought of this, and know the effects already. Apparently putting products behind glass causes almost a 50% drop in sales( because people don’t want to bother), so stores would prefer not to put anything behind glass or a counter, but they do because the alternative is 100% loss from theft.

At this point it would be better if they moved back to pre-self-service stores, and have the product behind a counter, and store clerks that will get you what you ask. As things are now, it’s the worse of both worlds: you still need a clerk to get the product, but instead of once, you need to buzz and wait once per aisle. A byproduct of this is that the smash and grabs would decrease, as there is no direct access to the product.

Or to put it differently, maybe the format of stores where the product is all available and you can walk out freely was chosen because it decreased costs, even accounting for lossage. Now that lossage has increased, they should rethink the format.

Making employees manually fetch products is not a solution. That's way too labor intensive, and there's no excuse to make people waste their time doing menial labor like that in today's world.

I like what Amazon has in their Fresh stores, where you use a credit card to enter and an automated system tracks what you take and sends you the bill.

My argument is not wether this was optimal by any metric; my argument is that they are already having employers go around the store opening cabinets, many times multiple times for the same customer. That incurs in the same menial work as having everything behind the counter, and is also a worse experience (at least for me).

Can’t comment on the Amazon Fresh approach. Not sure if the costs are lower, for example. It could be that they are operating at a huge loss already.

That is the new model. You order on the app and pick up your items or have them delivered.

The other day I visited a target and half the merchandise was behind plastic walls. I walked right back out and they lost a few hundred dollars in sales, but the pick-up/delivery employees have their own keys to those plastic doors.

Eventually every store will just be an Amazon warehouse. The economic pressure (and by extension, ecological pressure) is simply in that direction.

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