Big box retailer, Target, recently had an expensive problem in their third quarter earnings report. Target’s stores have been looted so much it has significantly decreased their profit margin. The company calls this “organized retail crime”.
Watch the video below explaining the Q3 earnings.
Target said on a quarterly earnings call that “inventory shrinkage“, a euphemism for merchandise that has been stolen, shrank their gross profit margin by an astounding $400 million in 2022 when compared to last year.
It’s important to note this figure is only the loss year-to-date and the company anticipates losing $600 million from theft for the full year.
Target CFO Michael Fiddelke addressed the issue:
“…a handful of things that can drive shrink in our business and theft is certainly a key driver. We know we’re not alone across retail in seeing a trend that I think has gotten increasingly worse over the last 12 to 18 months. So we’re taking the right actions in our stores to help curb that trend where we can, but that becomes an increasing headwind on our business and we know the business of others.”
This is a trend not isolated to Target as other retailers have grappled with this issue too.
Yahoo Finance Editor-in-Chief Andy Serwer stated:
“Why are people stealing these days? That’s a tough one. To some degree it’s a reflection of our times. Simply put, America’s social contract is straining. Until recently we’ve been able to lay out goods—often in mammoth, big box stores with only a handful of employees. When our social contract is strong—i.e people are getting a fair shake—it’s a model that works. Now it seems more people are stealing instead. (BTW, our stressed social contract may be capping how far we can push this people-light, technology-heavy model. Last month Wegman’s ended its scan-and-go shopping app. Why? Shrinkage, of course.)
I think wealth inequality has everything to do with all this. Think back to the so-called Public Enemies era in the 1930s, when bank robbers ran rampant across the land. That also coincided with the Great Depression. Less money in the hands of poor people and more stealing. Seems like cause and effect to me.”
This issue seems to be prevalent among liberal, progressive cities. Videos have surfaced all over social media showing criminals looting stores, seemingly without consequence.
Cities, like San Francisco, have taken soft-on-crime approaches which decriminalize nonviolent theft and misdemeanors for stolen goods. Unsurprisingly, when you lessen the disincentive for breaking the law, crime will increase and San Francisco has seen just that.
San Francisco saw burglaries increase by 50% and car theft increase by 22%, both of these figures far outpacing the national average.
The uptick in crime has forced Walgreens to close 17 locations in the Bay Area, due to massive losses from theft.
A similar trend can be seen in New York City, where theft is hurting retail business to a similar degree. The CEO of Rite Aid has complained about “inventory shrinkage” as well, which is primarily impacting them in NYC locations.
The company has been plagued with criminals stealing goods, undeterred by criminal punishment. This exemplifies a trend seen in many major cities.
Feature image is a screenshot from embedded video.
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