Walmart Cracks Down On Theft To Recoup Lost Revenue
By Christine Kern, contributing writer
New initiative is part of overall strategy to improve store management.
Wal-Mart Stores U.S. retail chief Greg Foran announced that the retail giant is aiming to reduce theft and other shrinkage at its 4,500-plus stores nationwide in a move to recoup losses and stem a decline in the company’s gross profit margin, Reuters reported.
Foran explained that the push is not so much due to an increasing problem, but rather is an effort to recoup some of the typical 1 percent of sales for any retailer and stem a 13 basis point decline in the company's gross profit margin.
"One percent of $300 billion is quite a lot of money. If you can save 10 basis points of it — boy I'll take it every day of the week and put it into lower prices for customers," Foran told Reuters.
In an earnings call last month, Foran said that theft (what the company refers to as ‘shrink’) was behind a decline in gross profit margins, and that half of the theft occurred in the food departments.
"In the first quarter, gross profit rate declined 13 basis points, driven primarily by a headwind from shrink, half of which was in food," he said, according to a transcript. "We are addressing this increase immediately, bringing a high level of focus and visibility to this concern by adding it as a key urgent agenda item this year."
The new initiative also represents part of a recent overall set of changes to improve store management that the retailer has been introducing recently, including wage increases, a more relaxed dress code, and better shopper-staff interactions.
The recent wage increases may mean that the retailer needs to be more aware of losses elsewhere, and thus this initiative is trying to “trim the fat” to meet the overall bottom line.
And, although the problem isn’t necessarily growing, according to Foran, as Wal-Mart boosts its food offerings, it may indeed be facing more theft in that category. Foran said that half its shrinkage related to theft was in food.