The discount retailer told reporters on a call to discuss third-quarter earnings results that shrinking inventory — or disappearing merchandise — has cut its gross margin by $400 million so far in 2022. “There are many things that can lead to shrinkage in our business, and theft is certainly a key driver,” said Target CFO Michael Fiddelke. “We know we’re not alone across retail in seeing a trend that I think has gotten worse and worse over the last 12 to 18 months. So we’re taking the right actions in our stores to help curb that trend where we can, but This is becoming a growing headwind for our business and we know the work of others.’ A Target representative told Yahoo Finance via email after the call that the shrinking was mostly “organized retail crime.” Market for US retail chain Target is seen on December 23, 2013 in New York, New York. (Photo by Mucahit Oktay/Anadolu Agency/Getty Images) Organized retail crime is not just a target issue, as it has affected other major retailers such as Best Buy and Rite-Aid. From Yahoo Finance editor-in-chief Andy Serwer earlier this year: “Why do people steal these days? That’s a tough one. To some extent it’s a reflection of our times. Simply put, America’s social contract is being stretched. Until recently we were able to place goods—often in mammoth, big-box stores with only a few employees. When our social contract is strong—meaning people get a good kick out of it—it’s a model that works. Now it seems more people are stealing instead. (BTW, our strong social contract may limit the extent to which we can promote this lightweight, tech-heavy model. Last month, Wegman’s ended its scan-and-go shopping app. Why? Downsizing, of course.) I think wealth inequality has something to do with all of this. Think back to the so-called Public Enemy era in the 1930s, when bank robbers ran rampant across the country. This also coincided with the Great Depression. Less money in the hands of the poor and more theft. It seems like cause and effect to me.” The story continues A member of the National Guard walks outside a Target store, which was initially boarded up due to unrest following the police killing of Walter Wallace Jr, a black man, in Philadelphia, Pennsylvania, U.S., November 4, 2020. REUTERS/Mark Makela TPX PICTURES OF THE DAY Shoplifted goods rose to $94.5 billion in losses in 2021, up from $90.8 billion in 2020, according to a new report from the National Retail Federation (NRF). The report found that the average rate of inventory shrinkage last year was 1.44%. While this is a modest decline from the previous two years, it remains comparable to the five-year average of 1.5%. “Retailers face security-related challenges on many fronts,” the NRF said. “Most of the retailers surveyed report that e-commerce and omnichannel fraud are on the rise. The majority of respondents also reported that guest-to-guest violence, external theft, ORC and cybercrime have become higher priorities Challenges with labor shortages, employee retention and recruitment – as well as issues related to coverage and maintaining COVID precautions – have contributed to the risks of violence and hostility.” Brian Sozzi is a senior editor and presenter at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Click here for the latest Yahoo Finance platform stock trends Click here for the latest stock market news and in-depth analysis, including the events that move stocks Read the latest financial and business news from Yahoo Finance Download the Yahoo Finance app for Apple or Android Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn and YouTube
