Retail Executives Sound Alarm on Shoplifting, Threatening Profits and Consumer Sentiment
Recent data compiled from earning calls by Bloomberg has shown that stock theft or “shrink” is becoming a bigger issue affecting the profits and balance sheets of both large and small retail chains. The retail industry recorded nearly 200 mentions of shrink this quarter, marking a doubling of the quarter-on-quarter data. Shrink is a term used to describe inventory loss and damage, but theft is noted as the main component causing concerns among retail executives.
Retail stores are finding it difficult to cope with losses caused due to theft. Lost or stolen inventory is estimated to cost Target Corp. alone by as much as $500 million a year. The impact of theft is not limited to lost inventory costs alone, but also impacts sales, customer sentiment and margins. Retail theft is also likely to shift consumer preferences towards online shopping, where margins are often lower.
The reasons behind the rise in retail theft are complex, involving a wide variety of factors. These include the rise of online marketplaces and the ease with which thieves can sell stolen goods on them. This trend has helped create a de-facto industry out of retail theft. Gaining conclusive data on the problem has been difficult to come by.
Retailers are taking several countermeasures, including locking merchandise behind plastic windows and implementing speed-limiters on shopping carts. However, despite these measures, they remain largely powerless in stopping the problem. Walmart, the world’s largest retailer, has stated that only law enforcement can provide a lasting solution.
The rise in media coverage of crime since the pandemic began may also be contributing to the increase in the number of executives discussing shrink, leading to concerns about the long-term impact of these trends on the retail industry.
The bottom line: Shrink and retail theft are becoming bigger issues for the retail industry. This poses a long-term problem for retailers and investors who may not have any control over these trends. The future is uncertain, and the best option for retailers could be to implement industry standard practices that can ensure that their products are tracked and monitored properly.