Target accused of making huge retail theft mistake
The retail chain made a drastic change earlier this year and that may have been the wrong move.
Retailers have complained repeatedly about the impact of climbing retail theft on their bottom line. In some cases, they're blaming organized retail crime (ORC) and they're also placing some of the blame on an increase in shoplifting.
"The average shrink rate in fiscal year 2022 increased to 1.6%, up from 1.4% the previous year. Shrink percentages can vary significantly by retail sector. On par with previous years, internal and external theft accounted for nearly two-thirds (65%) of retailers’ shrink," according to data from the National Retail Federation (NRF).
Related: Celebrity brand learns its Chapter 11 bankruptcy fate
Self-checkout has been blamed for some of the increase as allowing people to check out their own items increases opportunities for people to steal. It also creates a grey area where stores don't know whether a person made an honest checkout mistake or if they actually intended to steal the item.
That puts store personnel on the front lines — clerks and store associates not trained in security — to make decisions that can put them in danger. Whether they accuse someone falsely or correctly, the resulting anger could be the same.
Retailers including Target (TGT) - Get Free Report and Walmart have taken numerous steps to cut down on theft. This has included locking up some merchandise, increasing surveillance of self-checkout, and even limiting items that can be scanned in self-checkout lines.
Target has also taken the very drastic step of closing some stores where the chain felt workers were in danger. That may be a mistake based on which stores the retailer closed. Image source: John Smith/VIEWpress.
Target closed a number of stores
In October, Target closed nine stores across four states. That's not a decision the company made lightly.
"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. We know that our stores serve an important role in their communities, but we can only be successful if the working and shopping environment is safe for all," the chain shared in a media statement.
Target made it very clear that the company made every effort to not have to close the stores,
"Before making this decision, we invested heavily in strategies to prevent and stop theft and organized retail crime in our stores, such as adding more security team members, using third-party guard services, and implementing theft-deterrent tools across our business. Despite our efforts, unfortunately, we continue to face fundamental challenges to operating these stores safely and successfully," the company added.
The problem is that Target may have made a mistake in which stores it closed.
Target may have made a mistake
"Most of the Target stores closing had fewer than the stores left open nearby," according to a CNBC investigation.
That may be because crime may not be the full reason Target decided to close these stores.
"A lot of experts suspect that retailers are using organized retail crime as an excuse to cover up poor performance and internal challenges, and some problems of their own making," retail reporter Gabrielle Fonrouge," told NBC News.
Target issued a statement saying that the investigation's conclusions were "fundamentally flawed and disregard key facts about what our teams experience on the ground."
The retailer did not return a request for further comment from TheStreet.
Target stock is down 7.6% for the year due largely to slipping sales and continued financial pressure on consumers when it comes to making big-ticket purchases. Walmart, which has struggled with the same theft issues, has seen its share price climb by 9% year to date.
What's Your Reaction?
