The Season Of Five Finger Discounts: Shoplifting A $100 Billion Problem For US Retailers
US retailers are experiencing unprecedented losses due to a nationwide spike in retail thefts that has become a $100 billion problem for the industry. Brick-and-mortar stores have increased police presence and other theft-deterrent merchandising strategies as store managers beef up security to prevent five-finger discounts.
Across the nation, the number of shoplifting incidents has soared post-Covid, which has concerned the National Retail Federation.
NRF data shows shrink — an industry term for loss in inventory — accounted for 1.4% of retail sales in 2021, or about $94.5 billion. Before the pandemic, retail shrink increased by 7% on an annual growth rate, but as soon as 2020 came along, thefts jumped 47% and increased another 4% in 2021.
Retail thefts are so bad that Target reported last month that gross profit margins were reduced by $400 million this year. A Target spokesperson said the problem is primarily due to “organized retail crime.”
Organized retail crime has increased under the Biden administration while progressive-run cities implement social justice reform. Criminals are taking advantage of relaxed penalties for shoplifting, fueling a nationwide crime wave. California is one state where retail thefts have spiraled out of control.
In a CNBC interview earlier this month, Walmart Chief Executive Doug McMillon warned that if the retail theft problem weren’t addressed over time, “prices will be higher and/or stores will have to close.”
Needless to say, it is almost impossible to run a profitable business in such a toxic environment of thefts and inflation.
Even Dollar Tree said in its November earnings call that shrink and inflation decreased operating margins at its stores by 1%.
Electronic and drugstores have been hit the hardest:
“It’s a quick in, quick out [layout] with valuable electronics, over-the-counter drugs, cosmetics and beauty care, which are desirable and mobile items,” Read Hayes, a research scientist for the Loss Prevention Research Council, told WSJ.
Walgreens Boots Alliance’s CFO James Kehoe told investors earlier this year that shrink would slash net income “in excess of $0.15 a share” this fiscal year. He said shrink accounted for about 3.25% of the company’s revenue, jumping above historical norms of 2%.
And if progressive politicians nationwide fail to address the shoplifting crime wave, retailers will close up shops and move elsewhere. An exodus would cause their tax base to crumble.
Sat, 12/24/2022 – 19:15
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