Target stores are looted, and they take away a large amount of profits.
The discount retailer told reporters on a call to discuss Third quarter earnings results Shrinking inventory — or the disappearance of merchandise — has reduced gross margin by $400 million so far in 2022.
“There are a few things that can shrink in our business and theft is definitely a major driver,” said Target CFO Michael Fidelk He said. “We know we’re not alone across retail in seeing a trend that I think has gotten incrementally worse over the last 12 to 18 months. So we’re taking the right actions in our stores to help curb that trend where we can, but that’s becoming an increasing headwind to our business. We know other people’s business.”
A Target spokesperson told Yahoo Finance via email after the call that the downturn was mostly “organized retail crime.”
Organized retail crime isn’t just a targeted problem as it has affected other big name retailers like Best Buy and Rite-Aid. From Yahoo Finance Editor-in-Chief Andy Serwer earlier this year:
“Why do people steal these days? It’s hard. To some extent it’s a reflection of our times. Simply put, America’s social contract is tense. Until recently we were able to hand out goods—often in huge big box stores with only a few employees. When it’s Our social contract is strong – that is, people get a fair shake – this is a model that works. Now it looks like more people are stealing instead. We can push this heavy model in terms of technology. Last month, Wegman ended its survey-and-go shopping app. Why? The downturn , naturally.)
I think wealth inequality has something to do with all of this. Think back to the so-called era of public enemies in the 1930s, when bank robbers ran rampant across the land. It also coincided with the Great Depression. Less money in the hands of the poor and more theft. Seems like cause and effect to me.”
Shoplifted goods increased to $94.5 billion in losses in 2021, up from $90.8 billion in 2020, according to New report From the National Retail Federation (NRF). The report found that the average inventory shrinkage rate last year was 1.44%. While this is down slightly from the previous two years, it still matched the five-year average of 1.5%.
“Retailers face security challenges on several fronts,” the NSF said. “Most of the retailers surveyed reported that in-store, e-commerce and omni-channel fraud are all on the rise. A majority of respondents also reported that guest violence, outside theft, cybercrime and cybercrime are becoming a higher priority for their organisations. Challenges related to labor shortages, employee retention and staffing have contributed – Plus the issues around masking and maintaining COVID precautions – at the risk of violence and hostility.”
Brian Suzy It is a comprehensive editor and Anchor at Yahoo Finance. Follow Suzy on Twitter @tweet and on linkedin.
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