Target blames organized crime for its decline in profits. They claim that shoplifting and organized crime have cost them over $1.2 billion just this year.
The retailer’s earnings conference on Wednesday projected that inventory shrinkage due to merchandise theft would have a major impact on profits this year.
The company will lose $1.2 billion if it does not account for an additional $700 million in profit loss due to inventory shrinkage.
Brian Cornell, Chairman and CEO of Target, told reporters during the earnings call on Wednesday that the situation is only going to get worse.
Unfortunately, violent incidents in our stores are on the rise. When products are stolen, they’re no longer available for customers who rely on them.
If left unchecked organized retail crime will degrade the communities that we call home. While we address this issue, our first priority will always be the safety of guests and team members. In addition to safety concerns, the worsening shrink rate is putting pressure on our financial performance.
The issue of organized retail crimes has increased in recent years. Criminal gangs are trying to get goods at cheaper prices and then sell them to consumers amid a deteriorating economic climate.
A study by the National Retail Federation in 2022 found that thefts of goods in stores contributed to shrinkage in inventory, which resulted in losses in the industry totaling $94.5 billion, up from $90.8 billion in 2010. In the meantime, 32.8 percent said that organized retail crimes have become a greater concern in the last five years.
Matthew Shay, President and CEO of the NRF, said: “Organized Retail Crime has been a major issue for the retail industry for decades. It puts store employees and their customers in danger, disrupts store operations, and causes billions of dollars in financial losses for retailers and communities that they serve.”
In recent years, these concerns have increased as criminals have become more violent and brazen in their tactics. They are also using new channels to resell the stolen goods. NRF and members of the NRF have been advocating strongly for the “Combating Organized Retail Crime Act” in Congress because it is time to take decisive action and not just endless debate and platitudes.
Shoplifting and organized crimes are most prevalent in large Democrat-controlled cities like San Francisco and Chicago. A video posted last month from a Target in San Francisco revealed that the store had put its entire product line behind security glass.
A company spokesperson stated at the time that “organized retail crime is a concern for our business, just like it is for other retailers.” “We are taking proactive measures to ensure the safety of our team and guests while preventing and deterring theft.”
These mitigation efforts include hiring more security guards, adding guard services from third parties at certain locations, and using tools and technologies to prevent merchandise theft. We work with legislators and law enforcement to develop public policies that will help us achieve our goal of creating a secure environment in our store and keeping our doors in communities throughout the country open.