Target CEO Raises Concerns over Surge in Violent Theft and Organized Crime
Target Corp. CEO Brian Cornell has expressed his deep concern over the increasing incidents of retail theft and organized retail crime the company is facing. He emphasized the need to address the problem during a conference call to discuss Target’s latest progress. Cornell revealed that the company is experiencing an unacceptable amount of retail theft and organized retail crime, which is impacting its inventory shrink or losses caused by theft.
In particular, Cornell highlighted the alarming rise in theft incidents involving violence or threats of violence against Target employees. He noted that during the first five months of 2023, Target stores witnessed a shocking 120% increase in such incidents. This poses a significant safety threat to Target’s staff and raises concerns about their well-being.
The issue of theft and organized retail crime has been a persistent challenge for Target, resulting in a cumulated pressure on the company’s profits since 2019. The CEO further acknowledged that shrink rates have remained consistent with their expectations but are operating well above a sustainable level. He expressed disappointment that safety incidents associated with theft are moving in the wrong direction.
To address this pressing issue, Target’s chief financial officer, Michael Fiddelke, mentioned the company’s ongoing efforts to combat theft and organized retail crime. Fiddelke emphasized that they are working diligently, both within their stores and with government and community partners, to achieve lower loss rates over time. However, he clarified that although there are signs suggesting loss rates might plateau in the near future, there is currently no evidence to indicate that loss rates will begin to decrease.
Theft and organized retail crime have increasingly become major contributing factors to inventory shrinkage in recent years, affecting retailers across the industry. Home Depot Inc., for instance, recently discussed the ongoing battle with shrink in the retail sector. The impact of this issue amounts to billions of dollars each year.
Recognizing the need for a solution, the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act was implemented on June 27 to introduce more transparency to online transactions. This aims to discourage criminals from acquiring stolen, counterfeit, or unsafe items and selling them through online platforms.
According to the National Retail Federation (NRF), retail-industry shrink reached $94.5 billion in 2021, up from $90.8 billion in 2020, with external theft, including organized retail crime, being the primary driver. The NRF’s National Retail Security Survey revealed that retailers, on average, experienced a 26.5% increase in organized retail crime incidents in 2021. Furthermore, eight in 10 retailers reported a rise in violence and aggression associated with these incidents.
In light of these developments, Target’s stock experienced a welcome boost, rising by 4.7% on Wednesday, surpassing the S&P 500’s gain of 0.2%.
The surge in violent theft and organized crime is a critical issue that Target and other retailers are actively addressing. By implementing appropriate measures, strengthening partnerships, and enhancing security, they aim to create a safer environment for both employees and customers, ultimately contributing to the long-term sustainability of the retail industry.
