Target (TGT) announced the closure of nine of its U.S. locations, citing safety concerns for its employees arising from retail theft and organized crime. Target previously made efforts to combat theft, but these measures proved ineffective. Team members affected by the closures will be provided the option to transfer to another company store. Within the past year, inventory shrinkage has cost the company approximately $700 million.
Yahoo Finance Reporter Brooke DiPalma explains the impact of retail theft on Target and other major retailers, revealing staggering losses amounting to $112 billion with 67% of these losses directly linked to incidents of retail theft, as reported by the NRF.
Video Transcript
- And Target is taking action in response to retail theft by announcing plans to close nine stores. Yahoo Finance's Brooke DiPalma is here with the details. Brooke.
BROOKE DIPALMA: Good afternoon, Josh. That's right. Just in from Target, they announced plans to close nine locations, saying that they cannot continue operating these stores because theft and organized retail crime are threatening the safety of its team and its guests and contributing to what they said was unsustainable business performance. Now, prior to this decision to close those nine stores, the company said that they did take meaningful steps to invest in theft-deterrent tools. But despite those efforts, fundamental challenges to operate those stores safely and successfully was not possible.
Now, those stores, as you just saw, includes one in Harlem, New York, two in Seattle, Washington, three in San Francisco and Oakland, California market, and three in Portland, Oregon. Now, all of the team members that are going to be impacted by these closures will be offered an opportunity to transfer to another Target location. But in addition to shuttering those nine stores, the company's also taking the efforts that you could see right here. That includes payroll investments, to add more security team members, third-party guard services, as well as add even more theft-deterrent tools across stores.
And in some stores that even goes as far as implementing tools like locked cases for merchandise that they said is prone to theft. And lastly, the company is also investing time and resources in order to help better prepare its store leaders and security team members so they can better help themselves and de-escalate potential safety issues when hit by this organized crime. And as you can see here, these are pictures that I took over the weekend when I noticed that locked cases were now up at my local Target.
And, you know, these are really items when you think of toiletries, higher-priced detergents. And one expert that I spoke to said they often are locking up items that they said-- or for-- can be offered for a high resale value or a quick resale opportunity. And so really, when you think about the scope of this, we know that in the latest quarter from Target, they said that this is going to impact this year by cutting profits of up to $500 million.
We know that last year, theft shrinkage, inventory shrinkage, also hit profits by roughly $700 million. And so this continues to be an issue. And this is just one of the latest retailers to take a stand when it comes to retail theft.
JULIE HYMAN: This is such interesting stuff, Brooke. And of course, we've all encountered these types of cases not just at Target, but at a lot of different retailers because this is a bigger issue than Target. The National Retail Federation just out with some new data on this very issue. What can you tell us? What do we learn from the NRF?
BROOKE DIPALMA: Yeah. When I spoke to the National Retail Federation, they said that really, in the past few years, this problem has only picked up. We now know that in 2022, this was a $112 billion problem. Let me say that again, $112 billion. And that's up from 20-- that's up 20% from the previous 2021 year, when retail shrink accounted for $93.9 billion in losses.
Now, that new number that we have out today, that $112 billion number, about 67% of that is attributed to solely theft. And, you know, as I was speaking to experts at the National Retail Federation, what they were saying that we're only on the brink of understanding the full scope of the retail theft issue when you think about, you know, how much is evolving, and how much change is happening, and how ultimately smart these organized retail thefts are getting. He said that people are ultimately targeting the East Coast, saying that they're even going as far from traveling from West Coast to East Coast to target higher ticket items and then ultimately sending them-- or rather reselling items to third parties, like, even small mom and pops and bodegas that may not even be aware of where these sellers got this inventory from. We'll continue to watch it, Julie, for sure.
- Brooke DiPalma, thank you so much. We appreciate it.
