Source: CNN
A year ago, America’s stores declared a shoplifting epidemic. They closed stores in major cities, hired extra security, locked up key merchandise and declared big losses in their financial statements.
This year, retailers are telling a very different story — or no story at all. It’s as if the shoplifting crisis suddenly vanished.
Take Target, for example.
Last year, Target said a scourge of petty theft and organized groups stealing merchandise dented its profit by more than $500 million. Target also closed nine stores, saying “theft and organized retail crime” threatened worker and customer safety and made business unsustainable.
But now, Target is sounding a different message as it gets a better grip on lost merchandise, known as shrink. (Shrink and theft are often used interchangeably, although shrink also accounts for inventory losses from employee theft, damaged and spoiled products, administrative errors, vendor fraud and other factors.)
“We’re ahead of where we expected to be in terms of progress on shrink,” Target chief operating officer chief Michael Fiddelke said on an analyst call last month.
Other retailers have also shifted. Many retailers’ merchandise losses have stabilized or improved, and chains have publicly dialed back their rhetoric. Mentions of “shrink” on companies’ earnings calls dropped 20% during the first two quarters of 2024 compared with the same period last year, according to an analysis by FactSet.
Shrink has been improving in large part because companies’ accounting of their merchandise has gotten more accurate.
At first, retailers underestimated how much merchandise they were losing. When they adjusted their metrics to compensate, they overestimated their original losses in some cases.
Stores have also added ways to prevent theft, which may have been effective at reducing the problem, even if they frustrated shoppers. Companies locked up products and removed self-checkout stations.
And retailers are getting more assistance from many local and state governments, which are devoting additional resources and passing legislation to crack down on theft and organized crime. In California, for example, Gov. Gavin Newsom last month signed legislation creating stricter penalties for retail theft, including longer sentences for large-scale theft rings and lower thresholds for prosecutors to charge people for felony thefts.
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https://www.cnn.com/2024/09/13/business/theft-retail-shrink-stores/index.html