Recent profit reports from companies such as Amazon, Walmart, and Home Depot, along with other consumer statistics, indicate that the case for a 2023 recession is weakening, as the consumer economy shows resilience with rising real incomes, substantial savings, and continued spending in sectors like automobiles and services.
Several major retailers, including Dick's Sporting Goods, Lowe's, Target, and Macy's, have cited an increase in theft as a factor in their reduced earnings and are taking steps to address the problem.
Retail theft, known as "shrink," is becoming a growing problem for retailers, leading to concerns over profits and prompting companies to take preventative measures, such as installing locked cases and removing certain items from stores.
Despite initial concerns, some malls in America have experienced a recovery from the pandemic-induced decline in consumer activity, with more stores opening than closing in 2022 and an 11% increase in sales, according to a report from Coresight Research. Mall occupancy rates have also increased, and traffic levels have risen, indicating a positive outlook for physical retail.
Retailers in the US, including Walmart, Target, and CVS, are experiencing an increase in theft and organized shoplifting, leading to heightened security measures such as locked shelves, padlocked refrigerators, and scattered call buttons, in an effort to combat the rising issue that is impacting their earnings.
Retail theft has increased in recent years, but its impact on retailers' profits remains consistent, with losses from internal and external theft making up 65% of total shrink, according to the National Retail Federation's 2022 survey.
Organized crime rings in major US cities are increasingly targeting retail inventories, leading to a rise in financial losses for retailers and prompting them to implement measures such as increasing internal payroll and employing third-party security personnel.
The rise in theft and violence at major retailers like Target is not only impacting the companies themselves but also negatively affecting the communities they operate in, leading to store closures, job losses, and reduced tax revenue.
Target plans to close several stores due to retail theft and organized retail crime, raising concerns about the worsening problem and prompting retailers to lock up merchandise and push for stricter legislation; however, reliable data on the extent of retail theft is difficult to obtain and it remains unclear if companies are using theft as a cover for other issues like mismanagement or underperformance.
The National Retail Federation's 2023 Retail Security Survey reveals that major U.S. cities, including Los Angeles, Oakland/San Francisco, and Houston, have been heavily impacted by organized retail crime, resulting in significant inventory shrink and financial losses for retailers.
Los Angeles remains the top city in the US for organized retail theft, with the average "shrink rate" increasing to 1.6% and resulting in $18.2 billion in losses, prompting the creation of a regional task force to combat the issue.
