Target’s decision to close nine of its stores in major cities, citing persistent large-scale theft at those locations, is the latest signal that retailers may be struggling in their battle to contain a growing and dangerous problem.
Industry experts say even a small increase in crime can have massive, cascading effects that cause retailers to close stores.
“It’s proof that store crimes are reaching a new level,” said Burt Flickinger, retail expert and managing director of retail consultancy Strategic Resource Group.
But store crime is among a host of other challenges, such as pullback in consumer spending and excess inventory, that retailers are also contending with as they try to lift their store sales and make decisions on which stores to shut down.
And stolen items can have an outsized impact on store profitability, considering the razor thin profit margins many large retailers typically operate at.
“Increasing store crime is another variable in play right now for retailers,” said Zak Stambor, senior retail & ecommerce analyst with Insider Intelligence.
Organized retail crime
At issue is a particular type of store theft that loss prevention experts classify as “organized retail crime” or ORC. This isn’t a crime of need where an individual grabs an item or two, such as baby formula or food. It’s more insidious, and costly, companies and law enforcement say.
ORC theft involves groups of people targeting stores that carry higher-value merchandise like electronics, sporting goods, cosmetics, clothing, handbags and shoes. The groups steal large quantities of products and then resell them in secondary marketplaces, such as eBay, OfferUp and Facebook Marketplace or even back into the legitimate supply chain, according to law enforcement.
Shopping malls and high-end stores in large cities, including Los Angeles, Chicago and New York have suffered a spate of dangerous smash-and-grab attacks over the last year in which perpetrators have used sledgehammers and other equipment to break into stores and make off with several thousand dollars in merchandise.
Small businesses equally are at risk.
On Wednesday, the Pennsylvania Liquor Control Board closed 49 retail wine and liquor stores, 48 in Philadelphia, after 18 stores were looted overnight.
Police told CNN that 52 people were arrested, including three juveniles, who are facing burglary and theft charges, according to Jane Roh, spokeswoman for the Philadelphia District Attorney’s Office.
“Today, all FW&GS stores in Philadelphia and one in Cheltenham Plaza, Wyncote, Montgomery County, are closed in the interest of employee safety and while we assess the damage and loss that occurred,” said Shawn Kelly, press secretary for the Pennsylvania Liquor Control Board. “We will reopen stores when it is safe to do so and when the damage is repaired. It is too early to tell how much was damaged or destroyed.”
A Target logo is seen on shopping carts at a Target store in Manhattan, New York City, U.S., November 22, 2021.
Target says it will close nine stores in major cities across four states because of theft and organized crime
In recent weeks, a number of large retail chains have warned about the seriousness of the problem, both as a safety issue for their shoppers and employees, and potentially eroding profits this year.
Last month, Dick’s Sporting Goods warned that retail theft was damaging its business and would lead to lower annual profits. Discounters Five Below and Dollar General and TJX Companies (which owns TJ Maxx, Home Goods and Marshalls) also sounded the alarm on rising theft at their stores.
Nordstrom, Whole Foods and some other big chains said they were abandoning San Francisco because of changing economic conditions or employee safety. Many other retailers have blamed crime for closing stores.
“When you have so many retailers all pointing to store theft and all saying the same