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Wednesday, February 22, 2017

Strategic CSR - Walmart + crime

The article in the url below unearths an amazing problem at Walmart that I had not previously heard about (at least, not to this extent):
"Police reports from dozens of stores suggest the number of petty crimes committed on Walmart properties nationwide this year will be in the hundreds of thousands."
It is not only the amount of crime being committed, but also the type of crime, much of it very serious:
"But people dashing out the door with merchandise is the least troubling part of Walmart's crime problem. More than 200 violent crimes, including attempted kidnappings and multiple stabbings, shootings, and murders, have occurred at the nation's 4,500 Walmarts this year, or about one a day, according to an analysis of media reports."
To listen to Walmart, they are the unwilling victims of a social problem the firm is doing everything it can to solve. Anecdotal data from Oklahoma, however, suggests this might be a problem specific to Walmart—one that does not occur to the same degree, for example, at Target:
"It's not unusual for the [Tulsa Police] department to send a van to transport all the criminals [their officer] arrests at [one] Walmart. The call log on the store stretches 126 pages, documenting more than 5,000 trips over the past five years. Last year police were called to the store and three other Tulsa Walmarts just under 2,000 times. By comparison, they were called to the city's four Target stores about 300 times."
According to the article, the current situation at Walmarts across the U.S. is a direct result of short-term decisions made over the last decade and a half designed to produce immediate results in terms of profit:
"There's nothing inevitable about the level of crime at Walmart. It's the direct, if unintended, result of corporate policy. Beginning as far back as 2000, when former CEO Lee Scott took over, an aggressive cost-cutting crusade led many stores to deteriorate. The famed greeters were removed, taking away a deterrent to theft at the porous entrances and exits. Self-checkout scanners replaced many cashiers. Walmart added stores faster than it hired employees. The company has one worker for every 524 square feet of retail space, a 19 percent increase in space per employee from a decade ago. In terms of profit, all this has worked: Sales per employee in the U.S. have grown 23 percent in the past decade, to $236,804. For criminals, however, the cutbacks were like sending out a message that no one at Walmart cared, no one was watching, and no one was likely to catch you."
There are other reasons that might explain why the number of crimes being committed at Walmart stores vastly outnumber those being committed at comparable competitors. While there are some differences between the Target and Walmart stores in Tulsa, in reality, the different levels of crime boil down to Walmart's willingness to invest in employees who are present in the store:
"Target, Walmart's largest competitor, is a different kind of retail business, with mostly smaller stores that tend to be located in somewhat more affluent neighborhoods. But there are other reasons Targets have less crime. Unlike most Walmarts, they're not open 24 hours a day. Nor do they allow people to camp overnight in their parking lots, as Walmarts do. Like Walmart, Target relies heavily on video surveillance, but it employs sophisticated software that can alert the store security office when shoppers spend too much time in front of merchandise or linger for long periods outside after closing time. The biggest difference, police say, is simply that Targets have more staff visible in stores."
As with many things related to sustainability and CSR at Walmart, for all the good things the firm does, it is still difficult to be convinced that the senior executives 'get it' and are willing to expand the horizon on the firm's return on investment to the medium to long term. It is interesting that the article lays much of the blame for this short-sightedness on Walmart's board:
"The question is whether Walmart is moving as fast as it can. Its executives 'could clean it up in a matter of a year were they to be given the financial support from the board,' says Burt Flickinger, managing director of retailing consultant Strategic Resource Group. Eight of the nine nonfamily members of the Walmart board come from academia or nonretail companies, including former PepsiCo CEO Steven Reinemund and Yahoo! CEO Marissa Mayer. Three officers are members of the Walton family, including the chairman of the board, Gregory Penner, a venture capitalist who is the son-in-law of fellow board member Rob Walton, a son of Walmart founder Sam Walton. 'The board doesn't want profits to fall,' says Flickinger. 'They simply lack the retail business background to understand how important security is.'"
The business case for making this investment seems clear:
"Flickinger argues that Walmart can't afford not to invest heavily to expand its workforce if it wants cleaner, more orderly, better-performing, and ultimately safer stores. 'It pays for itself,' he says. 'To get back to that high-performing level of the late 1990s, it's going to take a lot more money.'"
Take care
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Walmart's Out-of-Control Crime Problem is Driving Police Crazy
By Shannon Pettypiece and David Voreacos
August 17, 2016
Bloomberg Businessweek