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DEERFIELD, Ill. – Walgreens Boots Alliance is rethinking its approach to retail security as it tackles a growing inventory shrink problem. Speaking during the company's Q1 2025 earnings call, CEO Tim Wentworth acknowledged that locking up products to deter theft has backfired.
"When you lock things up…you don't sell as many of them," Wentworth said, admitting that increased security measures have proven "largely ineffective." The company is now working on "creative" solutions to combat shrink while improving in-store experiences for customers, according to Fortune.
Shrink, which includes theft and inventory losses, surged 52% during 2020 and 2021, prompting Walgreens to invest in additional security measures. However, these efforts have impacted sales, particularly for commonly looted goods that are often placed behind locked displays.
Walgreens plans to close approximately 450 underperforming stores in 2025 as part of a "footprint optimization program." Wentworth noted that the stores remaining open outperform those set to close by about 250 basis points.
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In addition to addressing shrink, Walgreens is pivoting toward a health and wellness-focused retail strategy. It is introducing new product categories like superfoods, sports nutrition, and women's wellness while expanding its private-label offerings.
To enhance the customer experience, Walgreens is rolling out tech-driven solutions such as digital check-ins for pharmacy patients and micro-fulfillment centers to improve operational efficiency.
Despite challenges, Walgreens reaffirmed its full-year 2025 adjusted EPS guidance of $1.40 to $1.80, signaling confidence in its turnaround strategy. Wentworth's admission underscores the complexity of balancing security and sales in retail, but the promise of "creative" solutions suggests a fresh approach is on the way.
