Target announced on Tuesday that it will be closing its stores.
Nine stores across major US cities
The company cited violence, theft, and organized retail crimes. This news follows a warning by the company.
Inventory that has been lost or stolen is a problem
$500 million dent
Profitability is expected to increase this year
We can no longer operate these stores, as theft and organized retail crimes are endangering the safety of both our staff and guests.
In a statement to the press, the company stated that "our stores play an important role in their communities and contribute to unsustainable business results." "We are aware that our stores play an important part in the communities they serve, but we cannot be successful without a safe working and shopping environment for everyone."
The company will close a store in Harlem and two in Seattle. Three stores are in the San Francisco/Oakland Bay Area. And three more stores are in Portland, Oregon.
CNBC reports that Target has more than 2,000 stores across the U.S.
The company has spoken out about organized retail crimes at its stores
The term shrink is used in the industry to describe losses resulting from damaged, misplaced, or stolen goods.
Today's announcement is a big one.
Target is also unique in that it has closed stores and blamed the closures on retail crime.
Brian Cornell, the CEO of the company, responded in May when asked if it planned to close any stores because of crime.
We don't want to shut down any stores.
We understand the importance of our stores. "They create local jobs and generate taxes. They are very important to local shoppers. And they play a crucial role in communities throughout the country."
We will continue to do all we can to keep our doors opened
", he continued. "At Target, we will be monitoring closely the safety of both our employees and our guests as well the financial impact on our business to determine the best path forward.
Target's Tuesday press release also stated that
The company is in favor of the passage of the "Combating Organized Retail Crime Act"
The Act proposes tougher penalties for theft crimes and changes the threshold that prosecutors must meet before filing federal theft cases. This Act also provides retailers with an official venue for exchanging information with law enforcement and each other through a proposed Organized Retail Crime Coordination Center.
Since 2022, six similar laws have been passed (six this year) and have been supported both by retailers as well as trade associations.
It goes beyond criminality...
Target's suffering reveals more layers of operational decay.
Over the course of a year, there has been an alarming accumulation of debt.
Unsold inventory, a backlash against the Pride merchandise collection and a noticeable pullback in consumer spending on non-essential goods
Clothing and home products are examples.
In August last year, during a earnings call, a manager made an unusual admission.
The company, along with other retailers, has highlighted the unexpected loss of profits caused by higher price reductions
Along with desperate attempts at offloading unpopular merchandise.
An increase in inventory is predicted to be correlated with an increase in shrinkage
Target has never mentioned this situation in the past 20 years.
While the implementation of locked cases, the hiring of third party guard services, extensive store leader training in de-escalation techniques, and substantial investment in cyber-defense to combat fraud and organized criminals have not made a significant difference,
The company stated in a press release that "despite our efforts, we still face fundamental challenges" to successfully operate these stores.
Target's announcement coincides with the National Retail Federation’s National Retail Security Survey. It sheds some light on the shrink data.
The retail bottom line is shrinking despite a jump to $112 billion from $93.9 billion in the year before. This trend has been repeated in the past, with an increase in average annual growth from 1.44% to 1.57% from 2021 to 2022.
Target has joined the ranks of Walmart Nordstrom and Walgreens Boots Alliance in experiencing similar problems.