In a bold move to combat the escalating threat of retail theft and organized retail crime, retail giant Target (TGT) has announced the closure of nine stores, effective October 21.
In a statement released on Tuesday, the company underscored the imperative of ensuring the safety of both its team members and patrons, while also stabilizing business performance. The statement read, “We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance.”
The stores slated for closure span key urban centers, including Harlem, New York; two in Seattle, Washington; three in close proximity to San Francisco and Oakland, California; and three in Portland, Oregon. Target has assured that all “eligible” employees will have the opportunity to transfer to other Target locations.
This decision follows Target’s grim report that inventory shrinkage, primarily stemming from theft, is projected to carve a $500 million chunk from profits in the current fiscal year, following a $700 million hit in 2022.
Target CEO, Brian Cornell, acknowledged in the company’s second quarter earnings call that while shrinkage in the second quarter met expectations, it remained alarmingly high, surpassing sustainable levels.
In an effort to preempt such losses, Target had implemented a series of robust anti-theft strategies, which included bolstering in-store security measures, engaging third-party security services, and deploying a suite of theft-deterrent tools.
Nevertheless, the retailer faced the harsh reality that closing select stores was the only viable recourse. The company lamented, “Despite our efforts, unfortunately, we continue to face fundamental challenges to operating these stores safely and successfully.”
The National Retail Federation’s (NRF) National Retail Security Survey has illuminated the gravity of the issue, revealing that retail shrinkage amounted to a staggering $112 billion in 2022, marking a nearly 20% surge from the previous year’s $93.9 billion losses.
In severely affected stores, Target has resorted to locking up certain merchandise categories notorious for retail theft, an initiative aimed at safeguarding valuable inventory. Customers now need to seek assistance from store employees to access these secured items.
David Johnston, NRF’s vice president of asset protection and retail operations, emphasized the long-term benefits of such measures, highlighting that safeguarding vital products like over-the-counter medicines and baby formula outweighs any inconvenience experienced by shoppers.
Target is also proactively channeling resources into payroll for additional security personnel, engaging third-party guard services, and intensifying training for store leaders and staff to deftly manage potential safety threats associated with organized retail crime.
In a bid to fortify its cyber defenses, Target is collaborating with the investigations division of the US Department of Homeland Security to develop bespoke tools aimed at detecting and preventing criminal activities. This initiative will also expand the breadth of data alerts and analysis to better detect and thwart fraudulent activities.
The scope of organized retail crime is only beginning to emerge, warns Johnston, highlighting that these criminal networks extend their operations across multiple states, and sometimes even across the nation, often traversing from the West Coast to the East Coast in pursuit of specific merchandise.
Target is not alone in grappling with this mounting crisis. Other major retailers, including Nordstrom and Walmart, are also sounding the alarm on the unprecedented surge in retail theft, calling for concerted efforts to address the issue. Nordstrom CEO Erik Nordstrom decried the historic highs in losses from theft, asserting that such levels are intolerable and necessitate action.
Walmart US CEO John Furner echoed these concerns, noting that shrinkage has experienced a noticeable uptick in recent years, with disparities observed across regions.
Source: Yahoo Finance