Target is closing nine stores in major cities across four states, claiming theft and organized retail crime have made the environment unsafe for staff and customers – and unsustainable for business.
The big box chain is part of a wave of retailers – both large and small – that say they’re struggling to contain store crimes that have hurt their bottom lines. Many have closed stores or made changes to merchandise and layouts.
Nevertheless, skeptics say stores have not provided enough information to back up their claims, and at least one retailer said theft was an exaggerated issue.
“We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance,” Target said in a statement. “We know that our stores serve an important role in their communities, but we can only be successful if the working and shopping environment is safe for all.”
It’s not clear that crime is growing significantly more serious. But as economic fears grow amid inflation and rising borrowing costs, shoplifting often comes with the territory, industry watchers say.
The stores Target plans to close will shut their doors on October 21. The stores include the East Harlem location in New York City, two locations in Seattle, three locations in Portland, and three locations in San Francisco and Oakland.
The retailer said it had added more security and implemented other anti-theft tools before deciding to close the stores. Affected employees will be able to transfer to other Target locations.
It is not clear whether the stores were under-performing or reaching their revenue goals. Target did not comment on this or provide data on theft at the stores. Target previously said it was expecting to lose $500 million this year due to rising theft.
Battle against theft
Nordstrom and Whole Foods closed stores in San Francisco. In its quarterly earnings call, Dollar Tree even said it might stop selling certain products in some stores. But one Walgreens executive earlier this year said it was possible the chain had “cried too much” over shoplifting.
Target’s announcement comes on the same day that the National Retail Federation released new figures on the state of retail theft.
The NRF, the retail industry’s largest trade group, said Tuesday that average shrink – a term that refers to merchandise that goes missing due to external and internal theft, fraud, damage and other reasons – cost retailers $112.1 billion in losses in 2022, up from $93.9 billion in 2021. The group said the average shrink rate in 2022 increased to 1.6%, up from 1.4% the previous year.
Target said it will continue to make “significant investments” to keep the rest of its 150 stores in those markets, and the nearly 2,000 stores in total nationwide, safe.
Besides more security and occasionally locking cases of products, Target said it’s partnering with the US Department of Homeland Security’s Homeland Security Investigations to combat retail theft and making “significant investments” into cyber defense.
The retailer is boosting its threat intelligence and data analysis to track and capture activity from organized crime groups, it said. Target also said it’s supporting legislation to prevent retail crime.
The NRF said retailers are also increasingly concerned about store crimes becoming more dangerous and violent and are opting to close stores in especially vulnerable locations.
These store locations served important roles in their communities – when the East Harlem location opened in 2010, the company said the first store to open on the Manhattan island was accessible to pedestrians and mass transit and that it would support the local economy.
Target said it has supported the communities the stores are in through donation and initiatives.
“Target, Kroger and Costco are the best in the country when it comes to investments in store security. So when Target calls out crime and says it’s closing stores because of it, it’s a blow to the community,” said Burt Flickinger, retail expert and managing director of retail consultancy Strategic Resource Group.
Target had warned in May that the company was bracing to lose half a billion dollars this year because of rising theft.
Flickinger said the retailers are grappling with a dynamic with organized retail crime, or ORC, where it’s potentially not more people stealing but the same gangs of individuals who are stealing repeatedly from the same stores.
Experts say ORC is the more insidious type of store theft which has retailers rattled. These groups steal large quantities of merchandise and then resell it in secondary marketplaces, such as eBay, OfferUp and Facebook Marketplace or even back into the legitimate supply chain.
One factor that police believe is a driver of organized retail crime more recently is the fact that under new criminal justice reform laws and local district attorney’s policies to reduce mass incarceration, grand theft — the law that covers shoplifting — is a crime that judges can no longer jail a person or even require bail, no matter how many times the same individual is caught.
The consequence of a store like Target then pulling out because of repeated theft hits a community hard, said Flickinger.
“More than the sales tax that it generates, it’s the commercial real estate taxes that go towards funding public schools and other community services,” he said. “When a superstore like Target leaves the neighborhood, it erodes the economic strength of the community. Jobs are lost, suppliers no longer come to the area, shopper traffic drops.”
Small businesses in California raise the alarm
Target was not the only retailer to raise concerns about retail crime today. Approximately two hundred Oakland business owners closed up shop for a couple hours Tuesday morning and held a demonstration to bring attention to crime plaguing the area.
“We need your help,” said public safety advocate and Oakland community leader Carl Chan in a plea to city, county, and state leaders to increase public safety in the Bay Area. “When I’m saying that people don’t feel safe, it’s not only about the businesses,” said Chan, president of the Oakland Chinatown Chamber of Commerce.
Their comments were echoed by many community leaders who are pushing elected officials to do more, but offered no specific solutions to curb rampant crime. Many small businesses, including convenience stores, are being victimized every single day, said Chan.
The City of Oakland, in a response, said it is working to strengthen community safety for residents, small businesses and visitors with measures such as expanding foot patrols in commercial districts citywide. In the coming weeks, the city said it will disburse grants for community ambassadors, safety programs, and small business assistance.
Crime statistics from the Oakland Police Department show that commercial burglaries jumped 76% from 2021 to 2022 and are up 56% when compared to the five-year average. The rally was held outside Le Cheval, a Vietnamese restaurant that has been a local mainstay for nearly forty years that recently announced it would close at the end of the month.
“This restaurant survived the crack epidemic. This restaurant survived Occupy Oakland and the riots. This restaurant survived the pandemic. But this restaurant can’t survive crime. We’ve got to put and end to this now,” said Greg McConnell, who owns a local consulting firm.
And on Tuesday, looters hit several stores in Philadelphia. Interim Philadelphia Police Commissioner John Stanford told CNN-affiliate WPVI that authorities don’t believe the Tuesday night looting in the city is related to a judge’s decision to dismiss all charges against a Philadelphia police officer who fatally shot and killed a man during a traffic stop.
Stanford told WPVI the looters were taking advantage of the situation and that teens and young adults have been detained related to the looting but they are processing those individuals at this time.
By 10 p.m. Tuesday night, the area of Center City along Walnut Street from Broad to Rittenhouse Square remained shut down because of looting earlier in the evening, Philadelphia Police officers guarding the area told CNN.
— CutC by cnn.com
