In a significant strategic pivot, Walgreens has introduced a novel store concept in downtown Chicago, fundamentally altering the traditional retail experience in an effort to address escalating retail theft while simultaneously aiming to enhance customer service. The redesigned location, situated at 2 East Roosevelt in the city’s South Loop neighborhood, which has experienced an uptick in crime, reopened on Tuesday following several weeks of construction.
The core innovation of this prototype store involves placing the majority of its merchandise behind counters, accessible only through digital ordering. This represents a stark departure from the familiar open-shelf model, confining customers to just two short aisles dedicated to so-called “essentials” for self-shopping, a move that prompts a reconsideration of the foundational principles of modern retail.
For items beyond these limited “essentials”—such as a bottle of liquor or a “non-essential” deodorant brand—shoppers must engage with the store’s new digital infrastructure. This entails placing an order at one of the iPad-like kiosks positioned within the store, after which the requested goods are retrieved by an employee and made available for pickup at a central counter.
The company asserts that this experimental format is part of its ongoing commitment to innovation. A Walgreens spokesperson confirmed the company is “testing a new experience at this store with new concepts, technologies, and practices to enhance the experiences of our customers and team members,” further elaborating that the new look and feel “focuses on shopping digitally for convenience.”
The initiative emerges against a backdrop of complex financial and operational considerations for Walgreens. During an earnings call earlier this year, James Kehoe, the company’s chief financial officer, suggested that executives “may have overstated the effects of organized shoplifting rings on its operations,” adding, “Maybe we cried too much last year.”
Despite this acknowledgment, Kehoe provided updated figures on inventory shrinkage, noting a reduction from 3.5% of sales last year to approximately 2.5% currently. This improvement, he indicated, has been partially attributed to an increased reliance on police officers rather than private security guards, alongside the introduction of innovative store designs such as this Chicago prototype, specifically engineered to deter crime.
The challenge of retail theft, particularly organized retail crime, has become a prominent concern across the industry. The National Retail Federation (NRF) reported that stolen goods from stores led to $94.5 billion in losses in 2021, an increase from $90.8 billion in 2020. Alarmingly, nearly 33% of surveyed companies expressed significantly heightened concern about retail theft compared to previous years.
Major retailers beyond Walgreens are also grappling with the financial implications of this trend. Target CEO Brian Cornell highlighted during an earnings call that organized retail crime is projected to result in an approximate $500 million reduction in Target’s profitability for 2023, underscoring the widespread nature and severe impact of these criminal activities.
The NRF’s analysis of 132 crime groups revealed that 16% employed violent tactics, including “smash and grab, use of weapons, battery, flash mob tactics, threats of violence” in stores. This climate of increased aggression has led to drastic measures, such as Amazon-owned Whole Foods temporarily closing its flagship 65,000-square-foot store in San Francisco’s Mid Market neighborhood to “ensure worker safety.”
Walgreens itself has experienced firsthand the severe consequences of retail crime. In 2021, the chain announced the closure of five stores in the San Francisco area, explicitly citing “out-of-control shoplifting” as the primary justification for these operational decisions, which were well-publicized at the time.
Beyond the theft concerns, Walgreens has navigated other significant financial challenges. The company reported a net loss of $3 billion in the first half of the fiscal year, predominantly driven by a substantial $5.4 billion after-tax charge related to opioid claims and litigation, rather than primarily by organized shoplifting.
Furthermore, in late May, Walgreens confirmed a reduction of 504 corporate jobs, representing approximately 10% of its corporate workforce, with the majority of affected positions located at its Deerfield and Chicago offices. These layoffs constituted about 1% of the company’s total U.S. workforce, indicating broader restructuring efforts.
Returning to the Chicago store at 2 East Roosevelt, the new layout features shelves for essential items that are no more than five feet tall. This design provides constant visibility across the shopping area, allowing employees and surveillance systems to maintain a clear view of customer activities, thus serving as a passive deterrent to theft.
Upon entering, customers are greeted by signage encouraging them to “Let us do the shopping” and “relax while we shop for you.” The pharmacy section, located in the back and to the left, is also equipped with its own advanced kiosk system, where employees are available to guide users through the process.
When a CWBChicago reporter visited the unique store, the experience was described as “Weird.” While attempting to purchase an ice-cold Coca-Cola, priced at $1.89 or two for $3, the reporter was initially charged $2.89 plus tax. The error required the assistance of two “shop for yourself” attendants to be quickly remedied.
Initial customer feedback on the concept has been varied. While some shoppers appreciated the convenience of readily accessible essential items, others voiced disappointment, interpreting the heightened security measures as a reflection of a perceived lack of trust. Some also indicated that the kiosk ordering system would not incentivize more frequent visits.
Consulting firm McMillanDoolittle, which also reviewed the store, identified several areas requiring improvement to ensure a seamless customer experience. They noted “painfully slow page loading times on in-store kiosks and incorrect online inventories” during their visit, highlighting critical technical friction points.
Additionally, McMillanDoolittle reported encountering out-of-stock products, which created a “significant letdown with a pared down assortment across only a handful of categories.” This issue is particularly critical for a store relying on a limited accessible assortment to maintain customer satisfaction and encourage repeat visits.
The firm also challenged the notion of “shorter dwell times” cited by store employees, finding their own visit to be “a lengthy affair requiring multiple store associate interactions to fulfill a kiosk-assisted order.” This suggests a potential misalignment between operational goals and actual customer experience.
Without the ability for customers to physically investigate products on shelves, the need for robust consultative service becomes paramount. McMillanDoolittle observed a sales associate having to pull multiple products and even display a photograph of the extensive backroom inventory to aid a purchase decision due to unexpected out-of-stock issues, illustrating the trade-offs in customer-facing interactions.
A significant element of community engagement and communication appears to be critical for the success of such a model. McMillanDoolittle noted that current store communication protocols “appear to dodge the issue of organized retail crime, leaving customers to arrive at their own (read: uncomfortable) conclusions about the new ways of shopping at Walgreens.” This could lead to “unfortunate and unintended results.”
Indeed, online reactions to the new store have frequently been negative, with social media users expressing frustration over the perceived inconvenience and the broader societal implications of such security measures. Comments included sentiments like, “I don’t blame any company for trying to stem loss prevention and theft but this design looks inconvenient especially for seniors and disabled.”
Other online commentaries connected the store’s redesign to political contexts, with users stating, “THANKS TO LIBERAL SOFT ON CRIME POLICIES, THIS IS OUR FUTURE,” and “The left’s ‘we don’t prosecuted theft’ is destroying America.” These reactions underscore the public’s sensitivity to changes perceived as responses to societal challenges.
The store’s operational philosophy evokes historical precedents, reminiscent of shopping before the advent of the self-service grocery store pioneered by Piggly Wiggly in 1916. Prior to this innovation, shoppers would present a list of desired items to a clerk, who would then gather them from various locations within the store.
As one commentary wryly observed, the current redesign effectively signifies a “Welcome back to the future.” This historical parallel highlights a full circle in retail methodology, driven by contemporary security concerns rather than pre-industrial retail practices.
Walgreens’ communication regarding the remodeling itself also revealed complexities. While an early response to a reader mentioned the store was “undergoing a remodeling effort for Walgreens to test new concepts, technologies and practices aimed at bringing the community a greater convenience and safety for our customers, patients and team members” and explicitly stated it would “mitigate theft and increase safety,” a company spokesperson later denied sending the letter.
This inconsistency in messaging underscores the delicate balance retailers must strike when communicating about security measures, especially those that dramatically alter the customer experience. The narrative surrounding such changes often requires careful management to prevent misinterpretation and maintain public trust.
The Chicago prototype embodies a critical juncture for Walgreens and the broader retail sector, showcasing a bold, albeit experimental, approach to persistent challenges. It represents an attempt to integrate advanced technology with operational changes to counteract a significant business threat, while striving to redefine convenience in a digital age.
The success of this low-touch, convenience-driven model will hinge not only on its effectiveness in reducing inventory shrinkage but also on its ability to deliver an exceptionally seamless customer journey. Addressing the identified friction points—from kiosk loading times and inventory accuracy to improving dwell times and enhancing consultative service—will be paramount.
Ultimately, the Chicago store serves as a tangible laboratory for the future of retail, where the pursuit of security and efficiency must harmoniously coexist with the fundamental expectation of a positive and accessible shopping experience. The insights gained from this pilot will undoubtedly inform strategies for retailers navigating an increasingly complex and evolving marketplace.
