Something About Wall Street

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Target And Organized Crime?

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Target And Organized Crime?

Jonny
Nov 16, 2022
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Target And Organized Crime?

somethingaboutwallstreet.substack.com

On Target’s earnings call today it became obvious to me just how serious of an issue looting is becoming. 

The retailer revealed that year to date they’ve lost over $400 million !

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This is from today’s call: 

"At Target, year-to-date, incremental shortage has already reduced our gross margin by more than $400 million vs. last year," Target CFO Michael Fiddelke said on the earnings call, "and we expect it will reduce our gross margin by more than $600 million for the full year."

This theft issue has been something that’s been plaguing physical retailers as of late. One of the reasons theft is on the rise could be a weak consumer as a result of a slowing economy and inflation sitting at/near 40 year highs.

The state with the highest number of organized shoplifting / retail theft cases… California. 

On the West Coast, 2.32% of retail sales lost to theft (in CA), according to the National Trade Federation.

Not too long ago I was shopping at a NYC Target and witnessed two men with large bags and masks come in and take whatever they wanted off of the shelves. There was plenty of time for an employee or a security guard to stop them, but everyone seemed to just not care… it even seemed like a boring, routine occurrence to them. I even had enough time to both consider, and then talk myself out of, practicing a few wrestling/Jiu Jitsu moves in a real life setting. (Would’ve been a very bad idea, but cool story.)

Afterwards, I went over to an employee to ask how often something like this happens, his response, “every single day, the only part I care about is the mess they always leave.”

It just seems like, for employees/security at least, the risk of stopping a thief is much greater than the reward. 

I’ve been noticing that retailers are beginning to lock more and more merchandise behind display cases. Having to ask an employee to unlock a shelf just for a stick of deodorant or some laundry detergent makes for a much less efficient and, in my opinion, less enjoyable shopping experience.

I wonder what would hurt overall profits more, increased security or allowing theft to continue as it is.

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Target And Organized Crime?

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