Retailers have repeatedly complained about the impact that rising retail theft is having on their bottom lines. In some cases, they blame organized retail crime (ORC) and also place some of the blame on the rise in shoplifting.
“The average shrinkage rate in fiscal 2022 increased to 1.6%, up from 1.4% the previous year. Shrinkage percentages can vary significantly by retail sector. On par with previous years, domestic theft and external represented almost two thirds (65%) of the contraction of retailers”, according to data from the National Retail Federation (NRF).
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Some of the increase has been attributed to self-checkout, as allowing people to check their own items increases opportunities for theft. It also creates a gray area where stores don't know if a person made an honest payment mistake or if they actually intended to steal the item.
That puts store personnel on the front lines (employees and non-safety-trained store employees) to make decisions that can put them in danger. Whether they accuse someone falsely or correctly, the resulting anger could be the same.
Retailers, including Target (TGT) – Get a free report and Walmart have taken numerous measures to reduce theft. This has included blocking some merchandise, increasing self-checkout enforcement, and even limiting items that can be scanned at self-checkout lines.
Target also took the very drastic step of closing some stores where the chain felt workers were in danger. That may be a mistake depending on which stores the retailer closed.
Image source: John Smith/VIEWpress.
Target closed several stores
In October, Target closed nine stores in four states. That's not a decision the company made lightly.
“We cannot continue to operate these stores because retail theft and organized crime threaten the safety of our team and our guests, and contribute to unsustainable business performance. We know our stores play an important role in their communities, but We can only be successful if the work and shopping environment is safe for everyone,” the chain shared in a press release.
Target made it very clear that the company did everything possible to avoid having to close stores,
“Prior to making this decision, we invested heavily in strategies to prevent and stop theft and organized retail crime in our stores, such as adding more security team members, utilizing third-party guard services, and implementing theft deterrent tools throughout our stores. “Unfortunately, our efforts continue to face fundamental challenges in operating these stores safely and successfully,” the company added.
The problem is that Target may have made a mistake in which stores it closed.
The target may have made a mistake
“Most of the Target stores that closed had fewer stores than those that remained open nearby,” according to CNBC. investigation.
This may be because crime may not be the main reason why Target decided to close these stores.
“Many experts suspect that retailers are using organized retail crime as an excuse to cover up poor performance and internal challenges, and some problems that they themselves created,” retail reporter Gabrielle Fonrouge told NBC News.
Target issued a statement saying the investigation's conclusions were “fundamentally flawed and ignored key facts about what our teams experience in the field.”
The retailer did not respond to a request for further comment from TheStreet.
Target stocks are down 7.6% for the year due largely to declining sales and continued financial pressure on consumers when it comes to making major purchases. Walmart, which has struggled with the same theft problems, has seen its stock price rise 9% so far this year.
