US Retailers Report Increase In Retail Thefts, Stores Suffering Major Inventory Losses

Walmart, Target, CVS, and many more are voicing concerns about the increase in petty theft and violent shoplifting incidents.

As per the National Retail Federation’s retail security survey in 2022, retailers suffered a loss of about $94.5 billion across the country due to ‘shrink’ in 2021.

Source : Getty

US retailers are finding it difficult to keep a check on retail theft and organised shoplifting. More and more companies like Walmart, Target, CVS, Walgreens, Home Depot, and many more are voicing concerns about the increase in petty theft and violent shoplifting incidents.

According to a report by the Agence France Presse, everyday products like toothpaste, washing powder, chocolate, and detergent are being kept under lock and key by the US retailers to keep a check on the increasing thefts. 

Dick’s Sporting Goods’ chief executive, Lauren Hobart, expressed his concern during a conference call and said, “Organized retail crime, and theft in general, is an increasingly serious issue impacting many retailers.” She added that the impact of such incidents on the inventory of the company was “meaningful” and affected it’s second-quarter results along with it’s outlook for the rest of the year, the report noted. Notably, the company expects an earnings per share of $11.33 to $12.13 for the year, down from it’s earlier outlook of $12.90 to $13.80. 

Brian Cornell, the chief executive at another US major retailer, Target, said, “During the first five months of this year, our stores saw a 120 percent increase in theft incidents involving violence or threats of violence. Our team continues to face an unacceptable amount of retail theft and organized retail crime.” Cornell also pointed out that these incidents led to an inventory loss much above the sustainable level in the long term. 

Meanwhile, these problems have added to the interest rate complications. Rates have been on an upward trend, increasing from near zero to about 5.5 per cent in just 18 months, the highest level in 22 years. 

These increased rates will lead to higher lending costs making borrowing funds much more expensive for the companies to either expand or do big purchases, in turn dumping the excess costs on the consumers, the report added. 

As per the National Retail Federation’s retail security survey in 2022, retailers suffered a loss of about $94.5 billion across the country due to ‘shrink’ in 2021. Here, retail shrink refers to the loss of inventory due to staff theft, shoplifting or administrative errors.

The survey further said that retailers witnessed a 26.5 per cent increase in organised retail crime on average in 2021, with the major chunk of respondents stating that the risks have increased as a result of the pandemic. This has in turn led to stores installing transparent walls with locks on shelves, often even using padlocked chains on refrigerators, the report stated.

However, these efforts are not sufficient. As such, some retailers are considering closing their sites. Walgreens closed five of its stores in San Francisco in 2021 due to theft, and Walmart shut down four outlets in Chicago this year, officially stating a lack of profitability as the reason. 

Walmart’s chief financial officer, John Rainey, said last month, “Shrink has increased a bit this year. It increased last year. It's uneven across the country. We don't want it to go up obviously because it could cause prices to rise.” He added that digital users are reporting an increasing number of ‘flash rob’ incidents where a group forcefully enters a store, takes items within reach and runs away. 

Last month itself, a Nordstrom store in Los Angeles suffered theft worth $300,000 of luxury items after a group of 30 masked people stormed the place.