‘Organized retail crime’ caused a staggering $400 million in profit losses this year
The target store is being looted and it is eating a huge profit.
The discount retailer told reporters on a call to discuss it 3rd quarter business results The drop in inventory — or the disappearance of goods — reduced its gross profit margin by $400 million through 2022.
“There are a number of things that can cause our business to shrink, and theft is definitely the main driver,” Target’s CFO Michael Fiddelke speak. “We know we’re not alone in retail seeing a trend that I think has gotten worse over the past 12 to 18 months. So we’re taking the right actions. right in our stores to help limit that trend where possible, but it’s become a growing headwind for our business and we know the business of people other.”
A spokesperson for Target told Yahoo Finance via email after the call that the drop was mainly due to “organized retail crime”.
Organized retail crime is not just a Target problem as it has affected other big-name retailers like Best Buy and Rite-Aid. From Yahoo Finance Editor-in-Chief Andy Serwer this early year:
“Why do people steal today? It’s a tough issue. To some extent it reflects our times. Simply put, America’s social contract is strained. Until recently, we were able to display goods—often in huge, giant boxes of shops with only a handful of employees.When our social contract was strong—that was, everyone people are getting a fair shake—it’s a model that works.Instead, it seems more people are stealing.(BTW, our intense social contract can be limited. How far can we advance this technology-heavy, light-for-people model. Last month, Wegman’s ended its scan-and-go shopping app. Why? Shrink of course.)
I think the inequality between rich and poor has something to do with all of this. Recall the so-called Common Enemy era in the 1930s, when bank robbers raged across the country. That also coincided with the Great Depression. The poor have less money and steal more. It seems causal to me.”
Merchandise stolen from stores grew to $94.5 billion in losses in 2021, up from $90.8 billion in 2020, according to a report. new report from the National Retail Federation (NRF). The report shows that last year’s average inventory loss rate was 1.44%. While that’s a modest decrease from two years ago, it still equates to the five-year average of 1.5%.
“Retailers face security-related challenges on many fronts,” NRF said. “Most of the retailers surveyed reported that in-store, e-commerce, and omnichannel fraud were on the rise. The majority of respondents also reported violence between customers and co-workers. , external theft, ORC and cybercrime have become top priorities for their organizations.The challenges of labor shortages, employee retention and recruitment – as well as issues related to wearing masks and maintaining COVID precautions – has contributed to the risk of violence and hostility.”
Brian Sozzi is an editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and more LinkedIn.
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