A top Walgreens executive conceded Thursday that the drugstore chain may have overemphasized the threat of organized retail theft, a sticking point in a bitter debate over criminal justice that helped fuel the ousting of the former San Francisco district attorney. Francis, Chesa Boudin.
“Maybe we cried too much last year,” Walgreens CFO James Kehoe said on an earnings call, in which he acknowledged that losses from “shrinkage” — likely stolen goods that disappeared from store shelves — had become more manageable.
While the inventory of 3.5% of the drugstore chain’s total sales disappeared last year, this year’s losses appear to be leveling off, Kehoe said, hovering closer to “the 2-and-a-half-year average range.” He further noted that Walgreens has beefed up private security patrols at its stores, which has proven to be “quite ineffective.”
Instead, the company will rely more on law enforcement. CNBC first reported on Kehoe’s comments.
Data released by the San Francisco Police Department in October 2021 does not corroborate Walgreens’ claim that uncontrolled theft forced it to close five stores. On average, ill-fated stores saw two shoplifting incidents per month from 2018 through their 2021 closing dates.
Retail theft — particularly at Walgreens and other stores like it — ignited fear and anger at a time when San Francisco appeared to be backing away from the progressive reforms instituted by Boudin, who promised to tackle mass incarceration and prosecute police.
Viral videos of drugstore capers ricocheted across social media, including one of a man putting items in a trash bag at a Hayes Valley Walgreens that closed in 2021. Although some
city leaders raised doubts about
Walgreens and a growing perception of lawlessness in downtown San Francisco, employees also faced increasing pressure to crack down on petty crime.
Last month, San Francisco police officers discreetly staked out stores, including pharmacies and clothing stores, to stop and arrest suspected shoplifters.
A Walgreens spokesman declined to elaborate on Kehoe’s remarks on Thursday.
Retail industry watchers who spoke to The Chronicle on Thursday expressed bafflement and skepticism that theft at Walgreens had slowed, at a time when representatives from other stores are pleading with city officials for more police.
Tony Sheppard, senior director at loss prevention software company ThinkLP, said that in conversations with hundreds of retail customers, he’s found that rampant merchandise looting “is still a very concerning issue.” He grew more optimistic with the recent passage of the Federal INFORM Act, which requires e-commerce marketplaces to verify high-volume sellers.
San Francisco supervisor Ahsha Safai, who has made retail theft a policy priority, said she can see why a Walgreens executive might downplay the impact of theft on an earnings call.
“This is a national audience and they are trying to build trust that their stores are safe and secure,” Safaí said, adding that Kehoe’s rhetoric on Thursday was in stark contrast to “the reality on the ground”.
He cited a scathing letter that Safeway representatives sent to the Mayor of London Breed and the Board of Supervisors at the start of the holiday shopping season, calling for swift action on the shoplifting and flashmob-style burglaries that were devastating businesses. In October, a security guard at a Safeway store in the Excelsior was shot and wounded while confronting an alleged burglar.
Such incidents have shaken Safaí, whose neighborhood includes the Excelsior neighborhood. Despite Kehoe’s upbeat predictions, merchants in San Francisco are lining up to hire off-duty police, the supervisor said: “What we’re seeing on the ground is something we need to anticipate and control.”
Rachel Swan is a staff writer for the San Francisco Chronicle. Email: rswan@sfchronicle.com Twitter: @rachelswan
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