Target To Shutter 9 Stores, Pointing To Organized Theft
Target Corp. is planning to close nine locations in four states in October, citing organized retail theft. The stores are in New York, Seattle, the Bay Area and Portland, Oregon.
“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,” the company said in a statement.
“Despite our efforts, unfortunately, we continue to face fundamental challenges to operating these stores safely and successfully.”
This isn't the first time that the retail giant has complained about organized retail crime impacting its operations. Late last year, the company estimated that “shrink,” or losses due to theft, shaved at least $600M from its gross margin for the year.
Other retailers have cited theft as a reason to close stores as well, such as Walgreens' closure of five San Francisco stores in 2021, though reporting by the San Francisco Chronicle citing local police department data found that reports of theft weren't particularly rampant at the closed locations.
Even so, retailers face a continuing problem with shrink. The National Retail Federation reported Tuesday that shrink accounted for $112.1B in losses for retailers last year, up from $93.9B in 2021. The average shrink rate for the year was 1.6%, up from 1.4% in 2021, though roughly the same as in 2019 and 2020.
“Our team continues to face an unacceptable amount of retail theft and organized retail crime,” Target CEO Brian Cornell said during the company's most recent earnings call in August.
“And unfortunately, safety incidents associated with theft are moving in the wrong direction,” Cornell said. “During the first five months of this year, our stores saw a 120% increase in theft incidents involving violence or threats of violence.”
Cornell also said that during Q2, shrink remained “consistent with our expectations but well above the sustainable level where we expect to operate over time.”
