Target Corp. is battling theft and organized retail crime, according to CEO Brian Cornell.
Speaking during a conference call to discuss the company’s fiscal first-quarter results Wednesday, Cornell described theft and organized retail crime as “a worsening trend.”
“It’s an urgent issue, not just for Target, but across the entire retail industry,” Cornell added.
In a statement that accompanied Target’s results, the CEO said that inventory shrink will reduce the company’s profitability by more than $500 million compared with last year. While there are many potential sources of inventory shrink, theft and organized retail crime are increasingly important drivers of the issue, according to Cornell.
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During the conference call, Cornell said that Target is working with the National Retail Federation, the Retail Industry Leaders Association and other partners across the country on the issue, and is advocating for public policy changes to tackle the problem.
Last year the National Retail Federation reported that retail industry shrink was $94.5 billion in 2021, up from $90.8 billion in 2020 — primarily driven by external theft, including organized retail crime. The NRF’s National Retail Security Survey, which was conducted with the Loss Prevention Research Council, found that retailers, on average, saw a 26.5% increase in organized retail crime incidents in 2021. Eight in 10 retailers surveyed also reported that the violence and aggression associated with organized retail crime incidents increased.
“The unfortunate fact is that violent incidents are increasing at our stores and across the entire retail industry,” Cornell said during the conference call.
Target is engaged in a number of “mitigation efforts” to combat retail theft that include adjusting its assortment of products in affected stores, according to Cornell. The retail giant has also stepped up security.
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The National Retail Federation is pushing Congress to provide law enforcement funding and other resources to combat organized retail crime.
Lawmakers have introduced bipartisan legislation in the fight against organized retail crime. In 2021 the Inform Consumers Act was introduced by Senators Dick Durbin (D-Ill.) and Bill Cassidy, (R-La.), and Representatives Jan Schakowsky (D-Ill.) and Gus Bilirakis (R-Fla.). The bill would require online marketplaces to verify the identity of high-volume third-party sellers to tackle the fencing of stolen merchandise and combat the sale of counterfeit goods.
Organized retail crime is estimated to cost federal and state governments nearly $15 billion in lost tax revenue, not including lost sales taxes, according to the Department of Homeland Security. It is also estimated that the average American family will pay more than $500 annually in additional costs due to the impact of organized retail crime, the Department says, on its website.
Target’s stock rose 1.5% Wednesday, outpacing the S&P 500 Index’s
SPX,
gain of 0.2%.
