An organized band of thieves are swiping merchandise totaling millions and stowing the goods in warehouses, the company said. The thefts — which retailers call shrink — will result in lower operating profit margins in 2020, Home Depot executives told analysts and investors during a meeting.
“This is happening everywhere in retail,” Craig Menear, chief executive officer said. “We think this ties to the opioid crisis, but we’re not positive about that.”
Home Depot’s claim is among the first times a big U.S. retailer has explicitly pointed to the opioid crisis as a reason its finances were off. Shrink costs retailers about $51 billion each year, according to a report from the National Retail Federation (NRF). The report indicated that over 65 percent of retailers in the past year saw a surge in “organized retail crime activity.”
“Organized retail crime continues to present a serious challenge to the retail industry,” Bob Moraca, vice president of loss prevention at NRF, said in a statement.
The habit-forming characteristics of opioids, combined with quicker ways to unload stolen merchandise, have likely led to grittier thieves that can get around retailers’ security systems.
Thieves in Rochester, New York, for example, had $16.5 million in merchandise on them when they were apprehended; $1.4 million was from Home Depot, executives said on the call with Bloomberg. The Atlanta-based retailer responded by implementing technology using machine learning to foresee where criminals would go next. The company also installed tech that caused power tools to fail unless they were routed through Home Depot’s point-of-sale system.
“We have to be vigilant about it,” Ann-Marie Campbell, Home Depot’s executive vice president of U.S. stores, said. “We have initiated several pilots to reduce shrink across the board.”
According to a study, theft accounts for 4 percent of inventory among retailers with self-checkout, more than double the rate for traditional checkout (1.5 percent).
In a separate study about shoplifting, 72 percent of offenders said self-checkout made theft easy to very easy.