In response to a surge in theft and organized retail crime, retail giant Target (NYSE: TGT) has announced the closure of nine of its stores located in major cities across four states. The company cited safety concerns for both staff and customers, as well as unsustainable business performance, as the primary reasons for this decision.
The move by Target is part of a broader trend among retailers, both large and small, struggling to combat store crimes that have had a detrimental impact on their profits. Many of these retailers have either shuttered stores or made significant changes to store layouts and merchandise placement.
While skeptics have called for more concrete evidence to support retailers’ claims, the problem of retail theft appears to persist. The economic uncertainties stemming from inflation and rising borrowing costs have contributed to an environment where shoplifting has become more prevalent, according to industry experts.
The affected Target stores are set to close their doors on October 21, with locations in New York City’s East Harlem, Seattle, Portland, and San Francisco and Oakland all impacted. Target has emphasized that it had previously implemented additional security measures and anti-theft tools in these stores before opting for closure.
Target has also committed to facilitating the transfer of affected employees to other Target locations, although it has not disclosed whether the stores were underperforming or failing to meet revenue targets. The retailer had previously warned of an expected $500 million loss in the current year due to rising theft.
Other major retailers have faced similar challenges, with Nordstrom and Whole Foods also closing stores in San Francisco. Dollar Tree even contemplated discontinuing the sale of certain products in some locations. However, there have been varying opinions on the severity of the issue, with one Walgreens executive suggesting that some retailers might be overstating the problem.
Related:
- Whole Foods Shuts San Francisco Flagship Store, Citing Staff Safety
- Walgreens Introduces ‘Anti-Theft’ Store Design In Chicago
Target’s announcement coincided with the release of new data from the National Retail Federation (NRF) on retail theft. The NRF reported that retail shrink, which includes merchandise lost due to theft, fraud, damage, and other factors, cost retailers $112.1 billion in 2022, up from $93.9 billion in 2021. The shrink rate increased from 1.4% to 1.6% during the same period.
Target has vowed to make significant investments to ensure the safety of its remaining 150 stores in these markets and its nearly 2,000 stores nationwide. This includes collaborations with the US Department of Homeland Security’s Homeland Security Investigations, bolstering threat intelligence and data analysis, and supporting legislation aimed at preventing retail crime.
Experts have highlighted the rise of organized retail crime (ORC) as a particularly concerning trend for retailers. These criminal groups steal large quantities of merchandise and resell them in secondary marketplaces, further impacting retailers’ bottom lines. Changes in criminal justice reform laws have made it difficult to detain individuals repeatedly involved in shoplifting, contributing to the challenge.
The closure of these Target stores, which played vital roles in their respective communities, has raised concerns about the economic impact on these neighborhoods. The loss of jobs and reduced economic activity can have lasting consequences.
While Target’s struggles with retail theft are evident, the company has faced other challenges in recent years, including inventory management issues and shifts in consumer spending patterns.
Information for this story was found via CNBC, CNN, Yahoo! Finance, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
