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Retail Crime May Ruin Holiday Shopping

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As the holiday shopping season approaches, there is an upsurge in organized retail crime, about which some executives have justifiably raised the alarm. According to the National Retail Federation’s 2022 National Retail Security Survey, overall losses from shrink, the word retailers frequently use to describe theft and other sorts of inventory losses, rose by almost 4% in 2021 to reach $94.5 billion. The report published in mid-September stated that external theft, especially theft attributable to ORC [organized retail crime], was the main cause of shrink losses. According to the poll, 81.2% of retailers reported “slightly more” or “far more” ORC-related hostility and violence compared to the previous year. ORC occurrences increased by 26.5% on average in 2021.

A factor influencing Target’s gross margin, according to CFO Michael Fiddelke, is “inventory shortage, or shrink, which is a rising challenge facing all retailers,” he said during the company’s third-quarter results call in mid-November. At Target, the incremental scarcity has already decreased our gross margin by more than $400 million compared to last year, and we anticipate that it will decrease by more than $600 for the entire year, he said. “This is a problem that affects the entire sector and is frequently caused by criminal networks. We are working with a variety of partners to establish industry-wide solutions.” On the conference call, the company’s CEO, Brian Cornell, referred to theft as a “increasing financial headwind” for the entire sector. He continued, “We’ve witnessed an upsurge in theft and organized retail crime across our industry, along with other merchants. “As a result, we’re spending a lot of money on technology and training that can prevent theft and keep our customers and store employees safe.”

Rite Aid officials had mentioned shrink as a problem the pharmacy chain was having about a month and a half before. They said during the Rite Aid quarterly results call in September. Heyward Donigan, CEO of Rite Aid since 2019, claimed that the pharmacy firm had seen “shrink has presented unexpected challenges, especially in our urban shops in New York. A $5 million rise in shrinkage and other factors “had an impact on the company’s front-end gross profit, “based on Matt Schroeder, CFO. The climate we operate in, especially in New York City, is not conducive to minimizing shrink, according to what you read and see on social media and the local news, according to Chief Retail Officer Andre Persaud at the time.

Rite Aid is enhancing its “product protection” and “structured retail client program,” he said, adding that the company’s ultimate goal is to “remain in the communities.”

Rite Aid has been “looking at essentially putting everything behind showcases” in some places, Persaud said in September, in addition to examining pharmacy-only and pharmacy prescription-only models and stationing off-duty law enforcement officers at specific stores. Concerns regarding organized retail crime have already been expressed by retailers. In a letter sent to House and Senate leaders in December of last year, the heads of numerous retailers, including Best Buy, Dollar General, and Kroger, expressed their concern about the “growing impact organized retail crime is having on the communities we proudly serve” and their support for the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act.

“Organized crime has significantly increased in towns across the country, impacting retail enterprises of all types,” the executives stated. “While we continually invest in people, regulations, and cutting-edge technology to fight theft, criminals are taking advantage of the Internet’s anonymity and some marketplaces’ failure to authenticate their sellers.” “This trend has affected legitimate firms who are forced to compete against dishonest vendors, made retail establishments a target for increasing theft, and has dramatically increased consumer exposure to harmful and deadly counterfeit products.”

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