Judd Legum: Off Target

[Nevilledog]

https://popular.info/p/off-target


Last week, major news outlets reported that Target expects to suffer an additional $500 million in losses due to a surge in "organized retail crime."

There is one major problem with these headlines: they are objectively false.

The reports were based on Target's earnings call for the first quarter, which took place on May 17. During the call, Target did not say that losses from "organized retail crime" would increase by $500 million in 2023. Rather, Target estimated that its total inventory "shrink" in 2023 would increase by $500 million this year. Here is a direct quote from Target Chief Financial Officer Michael Fiddelke:

[S]hrink reduced our gross margin rate by a full percentage point compared with a year ago. As [Target CEO] Brian [Cornell] highlighted, pressure from shrink has continued to increase, and we now expect that, if current trends continue, shrink will reduce our full-year profitability by more than $500 million compared with last year.

"Shrink" is an industry term that refers to missing inventory, and it has multiple causes, including inventory mismanagement, employee theft, and external theft. According to the National Retail Federation (NRF), an industry lobbying group that represents Target and other major retailers, about two-thirds of shrink is attributable to causes other than "external theft," the category that includes shoplifting.

Organized retail crime (ORC) is a subcategory of external theft. It is ambiguously defined by the NRF as "the large-scale theft of retail merchandise with the intent to resell the items for financial gain." The NRF does not define how much merchandise needs to be stolen to qualify as "large-scale theft."

*snip*

[haele]

1. Shoplifting by gangs is a real issue for retail.

Unfortunately for some small legit vendors, what will reduce a lot of retail shoplifting will be crackdowns on resellers on social media marketplaces (craigslist/Facebook), at swap meets and in street vendor stands.
That's where the gangs are selling shoplifted merchandise.

Haele

[Eko]

2. It would be easier to control it

if they would staff the stores adequately instead of cutting labor.