Target’s Chairman and CEO Brian Cornell announced the company will suffer an estimated $500 million in lost profits this year, citing organized retail theft as a primary factor.
Cornell told Yahoo Finance:
Left unchecked, organized retail crime degrades the communities we call home. As we work to address this problem, the safety of our guests and our team members will always be our primary concern. Beyond safety concerns, worsening shrink rates are putting significant pressure on our financial results.
In 2022, the retail giant recorded a $700 million loss from inventory shrinkage, Yahoo Finance reported. This is calculated based on losses from organized retail crime, vendor fraud, and damaged or mismarked items. On average, retailers attribute 37% of shrinkage to external theft, including organized retail crime, the National Retail Federation (NRF) reported.
Retailers saw a 26.5% increase in organized retail theft in 2021, according to the NRF. Organized crime networks will steal key items in bulk to resell on online market platforms like Amazon at a cheaper price.
In the previous year, eight of ten retailers reported seeing an increase in violent acts carried out during organized retail thefts, the NRF said.
“The unfortunate fact is violent incidents are increasing at our stores and across the entire retail industry,” Cornell told Yahoo Finance. “And when products are stolen, simply put they are no longer available for guests who depend on them.”
As reported by Breitbart, downtown San Francisco Target employees reportedly witness a theft “ten times a day.” Many of the product shelves have been put in locked display cases.
With the rise in self checkouts and a dwindling number of employees in the store, experts consider this another factor in lost profits.
“‘If you had a retail store where 50% of transactions were through self checkout, losses would be 77% higher than average,’ according to Adrian Beck, an emeritus professor at the University of Leicester in the UK who studies retail losses,” CNN reported.
The majority of retailers, 68.5%, do not have an organized retail crime team put in place, the NRF reported.
In January, Sen. Chuck Grassley (R-IA) introduced the Combating Organized Retail Crime Act of 2023.
Compared to 2015, the cost of organized crime to retailers increased by 50%.