Target Was the Target of Retail Thieves in 2022, And It Cost The Company Millions

 

Target’s recent quarterly earnings were unfortunately lackluster all-around, missing quarterly expectations with a profit margin of 3.9%, lower than its 5.35% estimates. Consumers’ dwindling confidence and tightening pocketbooks are likely to blame for a slow down in revenue for the retail giant; chairman and CEO of Target blamed “meaningfully” lower sales and profit margins on “guests’ shopping behavior increasingly impacted by inflation, rising interest rates and economic uncertainty.” Also on Target’s receipts for where to place the underperformance blame was a surprising group: retail thieves. Apparently, “inventory shrinkage,” which is a nice way of putting shoplifted product, was one of the main factors that contributed to a poor quarterly performance.

Retail thieves scored big year-over-year on Target shoplifting runs. Missing inventory slashed Target’s gross profit margin by $400 million compared to 2021’s same-quarter numbers. What put Target in the target of shoplifters to the degree that it cost the company millions? And to what degree should Target address this profit-gauging issue through enhanced security measures without negatively impacting customer perceptions or experiences?

Venkatesh’s Thoughts

“Organized crime is a menace to the retail industry. It is estimated that about a hundred billion dollars are lost due to shrink, or due to theft or crime. And Target is just one of the retailers who experience this problem. Last year Walgreens had a problem. They had to close about five locations in California and a number of stores that they feared would be lost on a continual basis due to crime.

And the one of the reasons why Target is targeted this time is because Target has a lot of inventory, excess inventory, and it’s trying to clear that. And so maybe the retail thieves see it as an opportunity to attack them at this point in time. However, the best ways in which Target and other retailers can combat this crime is to be well-prepared, having good security measures, collaborate among the other retailers, get law enforcements in order and be very vigilant. This is something that the retail industry has to collectively solve because it’s increasing at about 25% a year.”

More Thoughts from Venkatesh: “Analysis: Lessons for CEOs from the Schultz & Starbucks Union Avoidance Campaign”

Follow us on social media for the latest updates in B2B!

Latest

Thanksgiving holiday weekend
Thanksgiving Holiday Weekend Proved the Omnichannel Customer Has Fully Matured
December 2, 2022

Now widely reported, last weekend’s Black Friday and Cyber Monday sales were record-breaking on all accounts. Nearly 200 million customers hit physical retail stores over the Thanksgiving holiday weekend according to NRF, a feat all of its own and a validation of the brick & mortar store in an age of omnichannel sales strategy. […]

Read More
travel and hospitality
Consumers Seek More Value from Travel and Hospitality
December 2, 2022

A recent report from PwC suggests that revenue for hotels will continue to go up over the coming months. This is great news for hoteliers who survived the 2020 pandemic and are looking to recoup costs. What’s more, studies also suggest that customers are happy to pay for these increased prices, even at inflated rates. […]

Read More
Colorado healthcare incentives
Are Colorado’s Crafty Healthcare Incentives an Effective Strategy to Lower State Care Costs?
December 2, 2022

Colorado has some of the most expensive healthcare in the U.S., which already spends more than any other country on administering healthcare. Some studies place it in the top half of most expensive states for care in the U.S., while others place it in the top 10. In 2018, for example, Colorado’s average price per […]

Read More