Why increased anti-theft practices could be good news for Amazon

However, by doing so, retailers may have unintentionally increased sales at their biggest rival: Amazon.

The Adobe report found that American consumers increasingly shopped online during the first four months of the year, with online sales increasing 7% to about $331 billion from a year ago. The same report found that online grocery sales are up almost 16% year-on-year, meaning frustrated customers are turning to delivery services to bypass annoying security windows. Online cosmetics sales – a category that includes a large proportion of closed merchandise – also helped to strengthen growth, up 8% compared to the same period a year ago.

Meanwhile, Amazon’s e-commerce businesses reported sales of more than $54 billion in the most recent quarter, up 7% from the same period a year ago.

Meanwhile, major retailers are introducing safeguards to prevent shoplifting.

If the latest earnings season is any indication, executives on conference calls are more positive about the contraction situation than they were a few quarters ago, with several touting various anti-theft strategies.

Home Depot, which has locked down some merchandise and invested heavily in anti-theft technology, said it was “delighted with the initial results” even though reduced retail sales “continue to be a concern.” Target said it expects the rate of shrinkage to stabilize this year after estimating crime-related losses to increase by $500 million last year. On a more negative note, Walgreens said shrinking businesses continue to be a “systemic problem in the retail industry” after the company reported a 6% decline in retail sales in the first quarter. Ulta locked down some merchandise last year and later said the strategy reduced theft.

In summary, greater in-store security appears to be a benefit for retailers plagued by theft. While anti-theft measures may discourage dishonest customers, consumers who don’t want to wait for workers at understaffed stores to unlock item after item may instead turn to online shopping, including Amazon, security experts told Modern Retail .retail. This can come at a huge cost to retailers who don’t have robust e-commerce. And even if they have an online store, it doesn’t mean that price-conscious customers will be tempted. As persistent inflation motivates consumers to compare prices, buyers may find a cheaper product elsewhere and take their business there instead.

Anti-theft maneuvers such as locked merchandise are nothing new. It is typical for more expensive items such as electronics to be behind safety glass. However, it is much more common these days as retailers increasingly put inexpensive everyday products like shampoo and toothpaste under lock and key.

“Having to go around and ask to unlock everything is becoming a major problem,” said Neil Saunders, managing director of GlobalData. “Most people will just say, ‘You know what, it’s too much trouble. I can go online, order these things and have them delivered to my door.”

Indeed, according to the retailer’s latest results, retail giant Target, which has previously discussed investing in numerous anti-theft strategies including locked merchandise, has recently seen sales at its brick-and-mortar stores decline as foot traffic declines. Meanwhile, digital sales increased.

The goal is not alone. In addition to locking items, Home Depot has invested in technology to prevent retail theft, including shopping carts that lock when customers don’t pay and license plate recognition cameras in parking lots. Earlier this month, Home Depot released first-quarter results in which sales declined for the sixth quarter in a row. Facing declining sales, Walgreens and CVS convenience stores also placed more items behind secure glass.

There are certainly other factors behind weak retail revenues. According to earnings call executives, inflation is causing shoppers to shift to cheaper goods and spend less on discretionary products. Higher interest rates also make it more expensive to finance larger purchases.

“It’s not just because of store closures, it’s part and parcel of making it difficult for customers to use the store,” Saunders said.

Sky Canaves, an analyst at eMarketer, says that online sales, especially of health and beauty products, have been growing rapidly in recent years. On Amazon, sales of such products are growing even faster. eMarketer forecasts showed that Amazon’s personal care sales increased by approximately 28% in 2023, outpacing growth in overall e-commerce personal care sales, which increased by 17%. In 2024, sales of health and beauty products on Amazon should increase by another 15%.

“This is a category that Amazon has really focused on and prioritized growth,” Canaves said. Moreover, the e-commerce giant delivers goods faster than ever before, making it an increasingly attractive option for consumers, she added.

Indeed, Amazon has attracted more personal care brands to its platform. Kiehl’s From 1851, for example, announced last week that it would begin selling on Amazon’s online marketplace, joining other brands such as Clinique and Coach that have also expanded on Amazon. Kiehl’s products are sold in specialty stores such as Ulta, which said a year ago it would lock up some merchandise to prevent theft.

Amazon’s five best-selling product categories in the U.S. last year included health, personal care, beauty and grocery, according to a report released by Amazon earlier this month. In an interview, Dharmesh Mehta, vice president of global retail partner services at Amazon, said several factors – competitive pricing, assortment and delivery times – give Amazon a competitive advantage over brick-and-mortar retail, driving the growing popularity of such products on its online market. He said he hadn’t seen anything that “directly” linked anti-theft features to stores and increased online sales.

“That combination of price, selection and speed makes a huge difference,” Mehta said. “Over the last few years, we have made significant investments in these areas that customers recognize.”

Amazon news you need to know

• According to The Atlantic, products returned to Amazon “have gone to hell.”
• Amazon Fresh is cutting prices, following in the footsteps of Target and Walmart.
• A US judge rejected Amazon’s request to dismiss the lawsuit brought against it by the FTC.

What we discussed