Source: iStock | Jonathan Weiss
Will Walgreens’ New Anti-Theft Store Stop Stealing?
Walgreens is piloting a store concept dedicated to letting customers shop while preventing criminals from stealing.
The redesigned store in Chicago’s South Loop neighborhood has its merchandise entirely locked down except for two aisles dedicated to essentials that can be shopped independently, according to a report by CWB Chicago. Customers must choose what non-essential items they want from an iPad-based digital kiosk, then pick up the products at the checkout counter where a Walgreens employee retrieves them. Signage encourages customers to allow the store staff to shop “for them.” Shelves are low, providing constant visibility throughout the store.
Walgreens said it was “testing a new experience at [the] store with new concepts, technologies, and practices to enhance the experiences of [its] customers and team members.”
While a reader of CWB Chicago purported to have corresponded with Walgreens earlier this year and received a letter in which the chain specifically pointed to mitigating theft and employee safety among the reasons for the coming redesign, a Walgreens representative reached out to CWB Chicago denying that Walgreens authored the letter.
Much of retail’s recent problem with shrink has been attributed to organized retail crime, that is, criminal gangs that recruit people to shoplift from retailers on a large scale and resell the stolen goods online. On an investor call last month, Target CEO Brian Cornell said that organized retail crime stood to reduce the retailer’s profitability by $500 million in 2023.
Walgreens has been one of the most publicly visible targets of the wave of shoplifting affecting retail in some regions over the past few years. The chain in 2021 announced the closure of five stores in the San Francisco area, citing out-of-control shoplifting as the reason, a New York Times article from the beginning of 2023 recalls.
The chain, however, began doubling back on its claims about the severity of the shoplifting it was facing. James Kehoe, chief financial officer, went as far as to say that Walgreens may have overstated the effect of theft on the business and had “probably” spent too much on security measures.
Discussion Questions
DISCUSSION QUESTIONS: Will Walgreens’ new store concept stop theft and facilitate shopping? Do you see other chains adopting such measures?
Poll
Loading …BrainTrust
Dave Wendland
Vice President, Strategic RelationsHamacher Resource Group
Ken Morris
Managing Partner Cambridge Retail Advisors
Walgreens’ new store concept will reduce theft and divert shoppers to e-commerce, especially for intimate items.
Other chains will likely monitor Walgreens’ results before imitating this concept. Manual picking by store staff may reduce shoplifting, as well as productivity and morale.
Theft has certainly impacted nearly every segment of retail and most are searching for innovative ways to overcome this tremendous challenge. Will others adapt a similar approach to Walgreens? I would certainly expect so … especially if Walgreens can prove that shoppers are willing to use the technology, sales are not adversely affected, and staffing and inventory management does not become too big a hurdle.
I don’t believe this will be the only solution since countless other tests are underway across the retail sector as the theft issue continues to take center stage.
It may stop theft but it certainly doesn’t facilitate shopping: it’s annoying and cumbersome. That said, it is better than the approach of locking things away and having to call staff over to retrieve items. I guess it also beats having a store close completely. I have every sympathy for retailers suffering the impact of theft, but inconveniencing honest customers isn’t really the answer.
I agree, Neil. It takes the enjoyment out of the shopping experience, including the tactile quality…picking up the box and reading it, etc. I like the “art gallery” approach better….you only have one display item for each SKU, and the person scans it with the app to add to their order, digitally pays for it, then collects all their items at the front before leaving.
The cost of people is the biggest expense at store level, so I don’t see this as a sustainable option, unless you have a Micro Fulfillment Center (MFC) based approach with robotic picks. Controlling shrink is a very big deal, especially with self checkout. I believe a combination of RFID, video, and a floor reset with robotics is a viable solution for this segment, but one size doesn’t fit everyone.
It’s like the old drug stores where everything was behind the counter. Back to the future. That worked in Mayberry RFD, but it won’t work well in Chicago and San Francisco.
I am dating myself, but this reminds of those catalog stores where you filled out a form for the product you wanted, paid for it and waited for it to come down the conveyor belt. I don’t see how this is efficient for the customers. Time will tell.
The cost of people is the biggest expense at store level, so I don’t see this as a sustainable option, unless you have a Micro Fulfillment Center (MFC) based approach with robotic picks. Controlling shrink is a very big deal, especially with self checkout. I believe a combination of RFID, video, and a floor reset with robotics is a viable solution for this segment, but one size doesn’t fit everyone.
It’s like the old drug stores where everything was behind the counter. Back to the future. That worked in Mayberry RFD, but it won’t work well in Chicago and San Francisco.
The cost of people is the biggest expense at store level, so I don’t see this as a sustainable option, unless you have a Micro Fulfillment Center (MFC) based approach with robotic picks. Controlling shrink is a very big deal, especially with self checkout. I believe a combination of RFID, video, and a floor reset with robotics is a viable solution for this segment, but one size doesn’t fit everyone.
It’s like the old drug stores where everything was behind the counter. Back to the future. That worked in Mayberry RFD, but it won’t work well in Chicago and San Francisco.
Stop theft yes, I think it will also impact shopping and sales. You might as well go to a full BOPIS model….where’s the experience of looking at product alternatives, sale tickets, reading ingredients, and comparing products and offerings. It’s a sad alternative to the in store shopping experience.
This is taking us back to the old Consumers Distributing model. There are so many challenges with this concept, first and foremost that it will effectively shut down impulse purchases and opportunity to increase basket size — which is something Consumer’s Distributing struggled with. It also does nothing to address the real issues with theft. Organized Retail Crime smash and grab crews aren’t going to be deterred. The next biggest source of shrink is actually employee theft, which also won’t be deterred. This design only serves to stop the non-pro shoplifters, which are only a tiny percentage of the shrink problem. If you’re going to go to this extent you’d be far better served to go full on e-commerce, even taking a page from Asian companies by putting virtual stores via QR codes in subway stations or other frequented public spaces. If you’re going to have someone else shop for you to this extent, then go all the way and make it truly convenient.
This is a great way to eliminate customers from your store! Ingenious, if that’s your goal – ridiculous otherwise.
It’s sad that our retailer community has to jump through these hoops to remain open. ORC is a growing threat that has affected nearly all pockets of our big cities. How do we get ahead of it? Of course, local police and retailers should collaborate to find new methods that deter crime before it happens. Certainly, locked cabinets/shelves are one way, although there is a degradation in the overall customer experience for this. Additionally, software companies have camera technologies embedded into new solutions that help the overall shrink issue (in transparency, my company is deeply involved in this), and there other IoT, RFID solutions that are available as well. Yet, no one solution is a silver bullet. It will take a combination of technology, operational change and local community enforcement to crack this terrible issue retailers are facing.
We’ve got to do better than this. I’m a big fan of scary-looking security guards in the store, particularly off-duty police. We need to scare these punks away.
That would be cheaper too Cathy!
Nostagically, I remember when stores didn’t even have security guards.
A security person, scary looking or otherwise, is a great idea. It will add to labor costs per store but it is better than making shopping a cumbersome experience and will relieve associates from any level of security responsibility, which can be dangerous.
Lots of customers are hostage to specific drug stores because that’s where their prescriptions are filled. Picking up prescriptions is a planned event, so hopefully I can also plan ahead for any additional sundries I might need. Impulse shopping will be nil. Casual, stop-in shopping will be affected if there is an old-fashioned drug store near by. It’s crazy that it has come to this. Maybe local governments need to rethink the consequences of shoplifting. Seems like a lot of honest folks are paying the price for the dishonesty of a few.
I wonder how many iPad kiosks will be available. Will there be a wait for your turn?
Why will I go to Walgreens to order at a computer kiosk when I can order on my computer, phone, or iPad at home?
Can we think of more friction in the shopping experience?
How can I put this? NO. The solution is not to prevent customers from shopping, it is to prevent thieves from stealing. I am sure crime will be reduced by this concept, but I would also suggest that sales will suffer as well.
It is customer service done differently. Wonder if the number of store personnel is drastically increased with this model. It turns the store more into a fulfillment center setup, which helps with BOLPIS, reduce impulse purchase and it will decrease shrink. Ultimately it is about stores sales comp, would be curious to see how it works out
Here in the Detroit area aka The Plexiglass Capital of the World an alarming g amount of retail is conducted like this, especially in small neighborhood stores. So, what’s the problem?
First let’s stipulate it does work since in the most extreme versions you have yo put your money into a rotating plexiglass opening and only then receive your products or change. Makes it very hard to shoplift. But, what are you telling the people who live around your store? That they can’t be trusted? Well, that’s one pretty simple takeaway.
Oh, and what about random customers who enter the store because they are driving by and realize they need something? Well, you are sending a clear signal that your store is a danger zone so while the Coke and chips may be safe, the customers aren’t. I don’t know about anyone else but I tend to feel that if the owners and employees are willing to walk the store, neither should I.
And, as long as something is sealable, it will get stolen. Look at the number of ATM’s that are lost out of gas stations and c-stores.
Will the chains adopt these measures? Probably. After all, as a society we are better at treating symptoms than we are curing diseases. Crime is a complex social problem and one that won’t go away because of some plexiglass walls.
Walgreens approach will deter shoplifting but is also likely to have some negative impact on sales as I expect that many of their customers especially is older customers will find will find that using a kiosk to select merchandise to be cumbersome. One definite drawback is the inability to pick up the item to read the front and back of its label. I expect other retailer to take a wait and see apprach of to see the impact on sales, and shoplifting.
Walgreens approach will deter shoplifting but is also likely to have some negative impact on sales as I expect that many of their customers especially is older customers will find will find that using a kiosk to select merchandise to be cumbersome. One definite drawback is the inability to pick up the item to read the front and back of its label.
It’s unfortunate to see the rise of organized crime and shoplifting, especially in the retail pharmacy space. This has led to several store closures in key locations such as San Francisco and Chicago. However, Walgreens’ radical approach of setting up an Anti-theft store will not resonate with most customers. The service levels at most retail pharmacy stores are already nonexistent, and to depend on store associates to retrieve items for you will be an extremely inefficient and fiction-filled customer experience.
One of the primary purposes of going to a store is the art of discovery; impulse shopping is what you are planning and hoping for as a retailer. This has led to the “Target Effect” phenomenon, where customers had every intention of buying one item and leaving with far more than they planned for. Walgreen’s Anti-Theft store is a complete departure from this. As others have indicated, moving to an RFID, video-powered store with a significant micro-fulfillment operating model may be the best solution in the heavily impacted cities.
Folks, I ask one simple question: would you shop at this store?
I wouldn’t.
While ideas and experiments are welcome, we have to accept this will mean a lot of blind alleys; I suspect this will be one of them, for the simple reason that – Matt’s claim notwithstanding – this store does not (keep) “letting customers shop”…a least not in the traditional self-service model that has been retail’s default choice for over a century.
Sure there is the appeal of addressing security and shoplifting concerns with this approach, but I don’t believe most consumers expect this type of experience when shopping at a Walgreen’s or any other drugstore or convenience format. This approach completely shuts down the “shopping experience” and might as well be a BOPIS transaction. I suspect Walgreen’s is measuring the impact on basket size and shopping frequency by customers to see if the trade offs are worth their while in terms of revenue.
The general description is of the Catalogue store format. Customers placed their order from a Catalogue. Limited customer space displaying a few or new items, thereby reducing capital investment. Majority of the space is warehouse set up for picking customer orders. Conveyor belt brought product to the check-out area. This format was for hard goods not food or drugs. There was a balancing act between the retail price and the store labor cost as order pickers cost more than stockers. This format died out with the internet. Consumer would wait a few days for delivery for lower priced by eliminating the retail store. One advantage was shrink was limited to employees not the customer. This concept works well as long as the thief does not get into the warehouse space. Success will be determined if customers will wait for their purchases or move to internet.
This will just drive more people online, especially to Amazon, where ironically some of the stolen goods are being fenced. It would be better to implement a Just Walk Out where everyone who enters the store has to use a credit card, drivers license or app to validate to gain access.
After attending three days at NRF Protect, I had the opportunity to listen to Target discuss an innovative guest experience. Picture a shopper leisurely exploring the apparel section, smelling and selecting their scented candle firsthand. Meanwhile, in the background, their “digital” order is being assembled for a quick and convenient pickup once they return to the front of the store. Such and other concepts to provide the convenience for the “green shopping behavior” and infuse the required friction to deter the “red shopping behavior” has been, and will continue to be experimented with in various store formats. This allows us to test & learn and fail fast forward. We need to adapt according to the experience we wish to stand for for our key shoppers. I am on the fence, and biased as I have been in many store layout designs at Walgreens. However, I have to ask….how many of you got a sense of nostalgia, reminiscent of the “Service Merchandise” days. 😉
It’s good to see that radical approaches are being tested, even if this one takes us back to the 1950’s and before self selection. I am sure from this experiment there will be some learnings that can be scaled, looking forward to seeing the results, and whether the inevitable downward sales clip is greater than or less than the shrink clip.