- Retail thefts cause a reduction in profit margins and affect the profitability of companies.
- Some companies have experienced significant losses, such as an electronics chain that reported theft equivalent to 1% of its total revenue.
- Some retailers have chosen to close outlets due to this issue.
Retailers in the United States are realizing that their statistics indicate that there has been an increase in theft and that it is costing them hundreds of millions of dollars, not only in terms of products, but also in the investment they must make to try to avoid them, such as security systems and additional surveillance.
Target, for example, told investors in its latest financial report that “drawdown,” the industry term for losses from store theft, employee theft and other kinds of storefront crimes , impacted annual earnings by 500 million dollars.
Other retailers, such as Home Depot and Dollar Tree, said in their respective reports that the same effect it reduced its margins “several points” in the first quarter.
Foot Locker, meanwhile, He cited a “significant” year-on-year increase in thefts and in spending to prevent them.
The problem, according to the retailers, increased with the pandemic due to the economic problems of the clients, but it has increased later, even with the covid in the past.
The industry lost nearly $100 billion from the “reduction,” according to data from the American Retail Federation.
The company reports are in line with what the mayor of New York said earlier this year. Eric Adams talked about a 45 percent increase in shoplifting complaints by 2022.
According to data from Jack L. Hayes Internationala specialist loss prevention company, more than 75 percent of U.S. retailers saw increased burglary and theft losses by 2022.
Retailers who responded to the survey said they detected 45 percent more shoplifters and dishonest employees; and that they recovered 72 percent more stolen goods, but for every dollar that was recovered, they say they lost more than seven to theft.
The report speaks of more frequent, larger volume of merchandise and more violent robberies in 2022 compared to 2021.
This has caused a sharp increase in expenses to prevent incidents, both in security devices and in personnel, as published on May 29 by Financial Times.
Thefts that worry the industry
Customer and employee theft puts pressure on retailers’ revenues. These criminal acts reduce profit margins and affect the profitability of companies.
According to a study by the Retail Loss Prevention Institute (RILA), retailers experience an average 1.3 percent decrease in their profit margins due to theft.
Various retail businesses have been significantly affected by the thefts. For example, according to financial reports from a well-known electronics store chain, thefts represented approximately 1% of its total revenue in the last year. In addition, it is estimated that internal thefts carried out by employees accounted for more than half of the company’s total losses.
Some retailers have chosen to close outlets, such as REI, Nordstrom and Starbucks in US West Coast cities.
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