According to a 2022 study from the National Retail Federation (NRF), retail theft resulted in roughly $94.5 billion, across the industry, in 2021. That is markedly higher than the $90.8 billion posted the year prior. In the study, roughly one-third of retailers surveyed specify that organized retail crime has become a growing concern over the last five years. Of course, there is even greater concern that the issue will likely worsen.
This has become a particularly sensitive sticking point for popular big-box stores like Target. Target CFO Michael Fiddelke confides higher levels of inventory shrink have made it tough to turn major profits but organized retail crime is also a major contributor to the rise in theft. In fact, he says, these two things have led to “hundreds of millions of dollars of headwinds” that will probably dramatically affect the company’s 2023 bottom line.
If you have visited a Target location recently, you may have sensed a stronger presence from security guards. That’s because Target has hired more of them to reduce shrink from theft. You may have also noticed that traditionally accessible household essentials are now stored in locked cases on the sales floor. That is simply because small items are easy to steal, and necessities like toothpaste, surprisingly enough, are popular items for thieves to pocket.
Increased store security may be a simple and effective strategy for Target. After all, Walgreens appears to have experienced some reduction in theft-related shrink since incrementally upping its store security in Q1. In a recent earnings call, Walgreens noted that inventory shrinkage has actually dropped to about 2.5%. That is nearly half what they experienced the year prior. Walgreens feels the measure was so successful they might lay off hiring more security, at least for the time being.
While these two retailers have experienced different outcomes, the issue remains important for the industry. We should see more of this develop, especially as the year proceeds and approaches the higher-volume summer and holiday shopping seasons.
Retailers Scramble for Strategies as Organized Retail Theft Persists
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