Costco, Lowe's, Best Buy, and Tractor Supply are winning the battle against retail theft in a strikingly similar way

Dominick ReuterSep 23, 2023, 19:15 IST

Business Insider

A sales associate processes a purchase at a Best Buy store in Colorado. Retailers say adequate staffing is one way to fight retail theft. "We just have more employees in our stores and they just do an exceptional job of watching out over our stores," said Best Buy CEO Corie Barrie.David Zalubowski/AP

Retail executives generally agree that retail theft is worse than they've ever seen.
Even so, leaders from Costco, Lowe's, Best Buy, and Tractor Supply have said their businesses aren't so affected.

Dozens of retailers have warned investors in recent months that an increase in inventory shrink — driven primarily by retail theft — is taking a bigger bite out of profits this year."Organized retail crime is worse now than I've ever seen it," Tractor Supply CEO Hal Lawton told Insider in August."I've never seen anything like it," Lowe's CEO Marvin Ellison told the Goldman Sachs Retail Conference in September.Best Buy CEO Corie Barry told analysts her company is "definitely seeing an increase" in theft at certain stores.But each of those executives followed up their observations about the industry in general with statements about their companies in particular that echo Costco CFO Richard Galanti: "We haven't seen any major change in shrinkage," he said in May. "We've been fortunate in that regard."In other words, even as these retailers acknowledge a major problem facing their peers, they are managing to limit its effect on their businesses — Lawton even said shrink rates at Tractor Supply have come down for two years running.Taking a closer look, it's clear that these four companies have several striking similarities – qualities that are helping them win the war on retail theft.

1. Store location and layout

Tractor Supply stores tend to be in rural areas with lower population density.Dominick Reuter/Insider

With the exception of Best Buy, three of the four chains tend to have their stores in more suburban and rural locations that see fewer people.Both Lowe's Marvin Ellison and Tractor Supply's Hal Lawton said a lower population density contributes to the lower incidents of theft compared with busier locations.And with the exception of Lowe's, three of the four companies use a similar entrance and exit strategy that funnels every shopper past employees at cash registers or security checkpoints.

2. Big, heavy merchandise

Shoppers stocking up on staples like toilet paper and canned goods at a Massachusetts Costco in the early days of the COVID pandemic.John Tlumacki/The Boston Globe via Getty Images

A lot of the merchandise these four retailers sell is too unwieldy to be conveniently stolen.Whether it's a 96-pack of toilet paper from Costco, a flat-screen TV from Best Buy, a lawn mower from Lowe's, or a gun safe from Tractor Supply, it's often hard to be discreet (or quick) in leaving the store with merchandise."Most people aren't able to walk in and throw a couple of those 50-pound bags over their shoulder and walk out," Lawton said. "Even if you do, you're stealing only $80 or $100."Costco also notably sells ordinarily small items in curiously large packages that make them harder to conceal.

3. Secure displays

Leaf blowers are locked up at Lowe's. Power tools at stores like Lowe's are often kept on locked shelves, requiring customers to ask for help. Ben Tobin/Insider

For smaller or more expensive items, all four retailers aren't afraid of requiring customers to get help.Electronics are often sold at Costco with a pay-and-collect feature before they're ever placed in a cart, much like Best Buy keeps certain inventory off the sales floor until a customer requests it.And power tools at Lowe's and Tractor Supply are often kept on locked shelves, with Lowe's taking the extra step of selling some products that won't work unless activated at purchase.

4. Less self-checkout

Shoppers wait in a checkout line at a Costco wholesale store in Orlando. Retailers' approach to self-checkout can have an effect on theft rates.Paul Hennessy/SOPA Images/LightRocket via Getty Images

Another big theme is the way each retailer handles self-checkout, which has been blamed for spikes in theft rates when it is introduced at stores.Self-checkout is minimal to nonexistent at Best Buy and Tractor Supply, while Lowe's has invested big bucks in its asset-protection technology to keep a sharp digital eye on the store.Costco saw a slight increase in inventory shrink after it rolled out self-checkout three years ago, but those rates have since reverted to the longer-term trend as the company has taken a more hands-on approach to monitoring what goes on in those lanes.

5. More staff per square foot

Lowe's CEO Marvin Ellison says effective customer service is the "greatest deterrent" for theft. Mario Tama/Getty Images

All four retailers prioritize having knowledgeable, helpful staff and have high levels of customer engagement."We just have more employees in our stores and they just do an exceptional job of watching out over our stores," Barrie said of Best Buy.Meanwhile, a typical Tractor Supply location may have as many as eight people working in a relatively small, 20,000 square-foot store.For Ellison at Lowe's the best investment was simple: "Having spent my entire adult life in retail at every level, the one thing that I understand clearly is that the greatest deterrent for any type of theft activity is effective customer service."

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