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DEERFIELD, Ill. – Walgreens Boots Alliance is reevaluating its retail security strategy as it confronts a rising issue with inventory shrink. During the company's Q1 2025 earnings call, CEO Tim Wentworth recognized that locking up products to prevent theft has had unintended consequences.
"When you lock things up…you don't sell as many of them," he remarked, conceding that the enhanced security measures have been "largely ineffective."
The company is now focused on developing "creative" solutions to reduce shrink while also enhancing customer experiences in stores, as reported by Fortune.
Inventory shrink, which encompasses theft and losses, jumped 52% between 2020 and 2021, leading Walgreens to implement further security measures. Nonetheless, these tactics have negatively affected sales, especially for frequently stolen items that are often displayed behind locked cases.
As part of a "footprint optimization program," Walgreens intends to shut down around 450 underperforming locations in 2025. Wentworth pointed out that the remaining stores are performing approximately 250 basis points better than those that will close.
Beyond tackling shrink, Walgreens is shifting towards a retail strategy centered on health and wellness. The company is launching new product categories such as superfoods, sports nutrition, and women's wellness, and expanding its private-label selection.
To improve customer experiences, Walgreens is introducing technology-driven solutions like digital check-ins for pharmacy patients and micro-fulfillment centers to boost operational efficiency.
Walgreens has reiterated its adjusted EPS guidance for the entire year of 2025, projecting a range of $1.40 to $1.80, demonstrating its confidence in the turnaround strategy despite encountering challenges.
