Target executives report that retail theft is causing significant losses.

Target Suffers Considerable Losses Due to Organized Retail Theft

Target executives revealed on Wednesday that the retail behemoth is suffering from considerable losses driven by organized retail theft.

The Impact of Retail Shrink

Target CFO Michael Fiddelke remarked in an earnings call that retail shrink, the loss of products from theft, accidents, accounting errors, and other phenomena apart from sales, is expected to reduce profitability by an additional $500 million in comparison to last year.

The firm referenced “theft and organized retail crime” as “increasingly important drivers of the issue” in a first quarter earnings report, noting that the company is forced to make “significant investments in strategies to prevent this from happening in our stores and protect our guests and our team.”

The Urgency of the Issue

“It is an urgent issue, not just for Target, but across the entire retail industry. It is a problem that impacts availability of product. The shopping conditions are less convenient. And unfortunately, what I’m most concerned with is it puts our team and our guests in harm’s way,” Target CEO Brian Cornell said in the earnings call.

“We’re advocating for public policy changes to address the growing issues that surround all of us in retail today with theft and organized retail crime.”

The Need for Public Policy Changes

The National Retail Federation and the United States Chamber of Commerce indeed sought to rally industry leaders last year to back laws that would increase federal resources devoted to combating organized retail crime.

The trade association noted that crime networks have become increasingly “violent” and “brazen” in their tactics over the past two years, using methods such as smash-and-grab and threats of violence against store employees and customers.

Target’s Response

Target revealed six months ago that organized retail theft contributed to a $400 million financial loss, appearing to indicate that the problem continues to worsen.

“The unfortunate fact is violent incidents are increasing at our stores and across the entire retail industry,” Cornell added. “And when products are stolen, simply put, they’re no longer available for our guests who depend on them. Left unchecked, theft and organized retail crime degrade the communities we call home. As we work to address the problem, the safety of our guests and our team members will always be our primary concern.”

Cornell said that Target would install fixtures to protect merchandise and adjust the assortment of items in affected locations. “Our stores create jobs, serve local shoppers, and act as critical hubs in communities across the country, and we’ll continue to do everything in our power to keep our doors open,” he commented.

The Impact on Store Closures

Target was indeed forced to shutter four locations earlier this year, one in Philadelphia, one in Minneapolis and two in the Washington D.C. area, citing decreased foot traffic at the stores even as crime levels in both cities rise.

Several major cities have seen large numbers of store closures in recent months, a trend which comes as occupancy rates in major cities decline and elected officials call to defund law enforcement. San Francisco has witnessed the closure of multiple Walgreens locations, two Nordstrom department stores, a T-Mobile storefront, and a flagship Whole Foods grocery.

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