LOCK 'EM UP! ..... THE CRIMINALS, NOT THE PRODUCTS

Best Buy, Home Depot Lock Up Goods to Fight Theft

With theft attempts elevated from prepandemic levels, stores are grappling with how to stop the problem without turning off shoppers and investors

 

By Sarah Nassauer and Benoît Morenne

 

The Wall Street Journal

September 27, 2022 

To deter theft, Best Buy has replaced some products on shelves with QR codes. 

 

Shoppers are finding more empty space on store shelves, but not because the retailer is out of stock. In many cases, the items are locked away to prevent theft.

At a Best Buy Co. store in the suburbs of Houston, hundreds of items including Bose speakers and Fitbit activity trackers have been replaced by small blue signs that read, “This product kept in secured location,” and ask shoppers to find store workers for help.

“There used to be a lot more on the floor itself than locked up in cages,” said Gary Pearce, a 47-year-old manager at a disaster restoration company who shops in the store weekly.

The store is a sign of an endemic challenge for retailers: how to stop theft without shrinking profits or inconveniencing shoppers. Retailers have long dealt with theft, and frequency is down from a peak last winter for some, said retail executives. But theft attempt levels are higher than they were before the pandemic.

Many large retailers, including Home Depot Inc., have been locking up more items while testing other solutions. They track high-risk goods and lock up items in regions or stores being hit hardest, retail executives say. Best Buy BBY 3.15%▲ says it isn’t locking up more items overall than in the past, but continues to do so where needed.

It is a tactic that risks annoying customers and investors. In July a Best Buy analyst recommended selling the company’s stock after he observed conditions in dozens of stores and found items locked up or missing from shelves.

At Best Buy stores, less than 5% of its products are locked up or in backrooms for theft-protection reasons, about the same percentage as previous years.

“Putting products in cages certainly deters theft, but it probably hinders sales,” said R5 Capital CEO Scott Mushkin in the report titled “Heartbreaking.” Some stores, like one in Danbury, Conn., were in good shape, said the report, while others were messy or didn’t have enough items easily available for shoppers to buy.

Best Buy declined to comment on the research.

Around $69.9 billion worth of products were stolen from retailers in 2019, according to the most recent data from the Retail Industry Leaders Association, which surveyed members.

Theft surged after stores reopened early in the pandemic, retail industry executives say. In part, the rush to buy more online during that period led to more demand online for stolen goods, they say. In some cases stores have been understaffed due to the tight labor market or staffing choices, which means fewer watchful eyes, say some executives. In addition, well-organized theft groups working regionally have become prevalent, making the problem harder to solve than run-of-the-mill shoplifting.

Many retailers use a risk algorithm to determine which items to lock up and in what locations. A high-value item that is frequently stolen is a good candidate, say executives. Retailers often try other deterrents first, like moving a product closer to staffed registers, attaching an alarm that is removed at checkout or using more visible security staff.

Less-expensive items can get similar treatment. “For a store to be locking things up like toothpaste, Spam or honey, they would have had to have been repeatedly targeted over a period of time,” said Ben Dugan, director of organized retail crime at CVS Health Corp. and president of the Coalition of Law Enforcement and Retail, a group that facilitates planning between retailers and law enforcement.

Home Depot HD 4.63%▲ has been locking up more products during the past 12 months as a stopgap while testing more customer-friendly, higher-tech solutions, according to the company.

“It’s a triage-type scenario. It’s stop the bleeding and give yourself some time,” said Scott Glenn, vice president of asset protection at Home Depot.

Overall theft attempts at Home Depot continue to rise compared with before the pandemic, Mr. Glenn said. Shoppers don’t like when items are locked and Home Depot tries to avoid it, he said. But after a high-theft item is locked up, sales gradually go up because the store stays more consistently in-stock, Mr. Glenn said. In stores where Home Depot has aggressive theft deterrents, it has reduced loss to theft, he said.

Best Buy has long locked up some products as a large retailer of high-value electronics, say executives. Across all U.S. stores, less than 5% of its products are locked up or in backrooms for theft-protection reasons, about the same percentage as previous years, said Damien Harmon, executive vice president of omnichannel for the company.

Included in the 5% figures is a tactic Best Buy started using last winter as retail theft jumped, he said. The company replaced some products on shelves with QR codes so shoppers could scan, then head to registers to pay and pick up the product.

In some locations including the Houston Best Buy—which sits in an area where many local stores face elevated levels of crime, according to data from the local police department—the share of locked items can be higher. Shopper Mr. Pearce said he understood the extreme measures given the threat of theft.

Best Buy’s store inventory is being held differently than it has in the past, with less on floors due to more buying online, said Mr. Harmon. Products are brought to shoppers directly, which has the added benefit of also reducing theft, said Mr. Harmon.

After an item is locked, Best Buy watches sales trends and doesn’t get many comments about products being locked up, said Mr. Harmon. The company is also experimenting with training store staff to stand near high-theft items, he said. Its internal customer experience scores for stores are at a 15-year high, said a spokeswoman.

InVue, a Charlotte, N.C., company that sells retailers digital locks, tracking sensors and software, late last year started getting requests from retailers asking for more customer friendly options, said Chris Gibson, InVue’s chief product and marketing officer.

InVue is pitching more automated solutions that are more aesthetically pleasing or make it easier for store workers or shoppers to unlock a product quickly. Locking down products “became this draconian thing” during the pandemic, said Mr. Gibson. “A lot of our partners are saying, maybe that was a bridge too far.”

Browsing videogames at the local Best Buy used to be fun, said Zion Grassl, a 30-year-old video producer for a videogame website. Over the summer his local Best Buy in Eugene, Ore., removed the physical videogames from store shelves, he said, swapped with photocopy images of the front of the box that provide less information about the game.

Mr. Grassl said he understands the need to protect products from theft, but the change ruins the experience of browsing for something you didn’t know you needed.

“You still have this physical representation to look at, but it’s almost like they don’t want you to come in anymore,” he said.

Best Buy declined to comment on Mr. Grassl’s views.