Target is cracking down on its anti-theft measures, most likely due to organized crime, which has zapped a huge hole in the company’s pocket. The retailer claims that “friendly fraud” and theft cost them $400m this past year alone.
Michael Fiddelke, the Chief Financial Officer of Target, discussed the inventory shortage in their third-quarter earnings call recently. The shortage is also known as a “shrink,” which is when a company has fewer items in stock than its recorded inventory shows.
Possible reasons are shoplifting, admin errors, theft, damage, or fraud. Fiddelke explained to analysts that the shortage has cost the company $400 million so far this year, and it is expected to grow to $600 million before the year is out. He states that the massive shortage they’re experiencing is part of a nationwide issue that affects other retailers as well, putting emphasis on organized crime being the main reason why.
Retail crimes made headlines throughout last holiday season when some stores across the US were the victims of “flash mob” thefts that showed huge groups of thieves attacking a store at the same time, intimidating store security and grabbing what they could before fleeing the scene. The comments made by Twitter personnel hinted at a much more serious and long-term issue that’s changed the way the retailer takes remedial courses of action.
Some Target locations now have entire aisles covered by locked glass doors, even toothpaste aisles. Target made it clear that this is something they don’t want to do because it makes it far less convenient for customers to shop, but it’s what it’s come down to.
The corporation stated that its biggest priority is keeping its team and guests safe, and the remediation actions they’ve implemented are helping.
This is one of many situations that outline a serious, deep-rooted issue our country is currently facing, with a looming recession and layoffs rising only being a small part of that.