Should Rite Aid put its stores under lock and key?
Rite Aid has a shrink problem in New York City and it’s forcing the drugstore retailer to consider taking aggressive measures to keep goods from being walked out the door by thieves.
Heyward Donigan, CEO of Rite Aid, speaking on the chain’s second quarter earnings call pointed to“unexpected headwinds” the company faced due to “front-end shrink” in its stores.
Andre Persaud, executive vice president, chief retail officer, said that addressing losses to shrink was a priority for Rite Aid as every product stolen represented “a gross margin hit” that was not covered by insurance. He said that Rite Aid’s team has made strides “improving product protection” and is up to the challenge.
“I think the headline here is the environment that we operate in, particularly in New York City, is not conducive to reducing shrink just based upon everything you read and see on social media and the news in the city,” he said.
“Our goal is to stay in the communities. We’re piloting, looking at how do we just operate a pharmacy only and as a pharmacy prescription-only format in some of the communities. We have to — and the community wants us to do this. We’re looking at literally putting everything behind showcases to ensure the products there for customers who want to buy it. And then lastly, we’ve even had to go to the extent of using off-duty police officers in some of our stores.”
Rite Aid made the decision to close a store in the Hell’s Kitchen area of Manhattan after the store suffered losses of more than $200,000 in stolen merchandise over a two-month period, reports the New York Post.
An employee at the store told the Post, “They come in every day, sometimes twice a day, with laundry bags and just load up on stuff. They take whatever they want and we can’t do anything about it. It’s why the store is closing. They can’t afford to keep it open.”
A Business Insider report cites data from the New York Police Department, which shows that petty theft has gone up 42 percent year-over-year and robbery and burglary cases have also jumped significantly.
- Rite Aid (RAD) Q2 2023 Earnings Call Transcript – The Motley Fool
- NYC Rite Aid plagued by string of thefts finally closes its doors – New York Post
- Rite Aid execs are considering ‘literally putting everything’ into locked displays after reporting millions in losses from NYC shoplifting – Business Insider
DISCUSSION QUESTIONS: Does it make sense for Rite Aid and others operating in high crime areas to put all product behind showcases? Is operating pharmacy-only locations the answer?