Target’s sales and traffic rebounded this week after it closed stores with high crime rates, sources told The Post, suggesting more retailers may start closing stores due to shoplifting.
“Cheap chic” discount store Target reported profits and sales that beat Wall Street expectations on Wednesday as price cuts attracted inflation-weary shoppers. But Target’s Chief Operating Officer Michael Fidelke also cited “inventory declines,” or lower losses from shoplifting, for the company’s recovery.
Target said it was “making progress” in addressing store downsizing. The company closed nine high-crime stores last year in cities including New York and Seattle.
If these retail departures become more widespread — and experts warn they will if cities don’t crack down on crime — shoppers could end up trapped in “retail deserts” with nowhere to get affordable clothing, food or prescription drugs.
“In high-crime areas, there’s a very good chance that retail stores will go away,” said Gene Petrino, a former SWAT commander and co-owner of Survival Response, which helps businesses train employees to deal with workplace violence.
Store cuts have cost Target as much as $700 million in lost profits in 2022. The retailer estimates it will lose another $500 million in 2023, according to past earnings reports.
“[We] “We can no longer continue operating these stores because theft and organized retail crime are endangering the safety of our employees and customers and contributing to unsustainable business performance,” Target said in a statement last September.
Patrick McCall, president and chief financial officer of McCall Risk Group, told The Washington Post that he has heard rumors that other big-box retailers, including companies under the TJX Brands umbrella, are considering closing stores in Chicago.
TJX, which owns well-known chains such as TJ Maxx, Marshalls and HomeGoods, did not immediately respond to a request for comment.
There are alternatives to closing stores, but those options are similarly unpopular: Stores could lock up more products in cabinets, which would frustrate both customers and Instacart shoppers.
“Thiefs will not hesitate to smash shelves to steal merchandise,” McCall told the Post.
“It also creates customer service issues because many of these retailers are already understaffed and don’t have the manpower to put extra employees on the sales floor to open cabinets and displays every time a customer needs an item.”
Burglary, grand theft and petty theft in New York City increased by 86% between 2017 and 2023. According to New York Governor Kathy Hawkle:.
Inventory drawdowns for 2022 have expanded to $112.1 billion across the industry, up about $20 billion from the previous year. According to a report by the National Retail Federation:.
“The situation is getting increasingly serious,” David Johnston, NRF’s vice president of asset protection and retail practices, said at the time.
Target’s success after closing crime-ridden stores “could be a great harbinger,” says Bert Flickinger III, managing director of Strategic Resource Group. He told MarketWatch.
Drugstores such as CVS and Walgreens, which have announced plans to close up to 2,000 stores this year, are also closing stores across the country.
CVS has announced plans to close 900 stores in 2021, followed by 300 each in 2022, 2023 and 2024. While downsizing is likely a factor, CVS said the store closures are not the result of a single factor.
Stop & Shop announced it will close 32 stores this year as shoppers turn to more affordable grocery stores.
Home goods chains have also struggled: Big Lots said it would close 35 to 40 stores this year, and Corne’s filed for bankruptcy and closed Bob’s Stores.
“Unfortunately, the increase in violence against anti-theft officers has led many stores to adopt a ‘hands-off’ policy when it comes to apprehending shoplifters,” Petrino told the Post. “This has become common knowledge among criminals, making the problem worse.”
California Governor Gavin Newsom signed 10 bills last Friday aimed at cracking down on retail theft.
The bill increases penalties and fines for shoplifting, theft from vehicles, organized theft and reselling stolen property.
In California, shoplifters are only charged with a felony if they steal more than $950 in merchandise. Critics say California’s penalties are too lenient, but The state’s felony standards are stricter than those of neighboring Oregon, Nevada and Arizona..
Without better solutions, we could see more vacant storefronts.
Today’s retail environment is reminiscent of New York in the 1970s and 1980s, when crime “displaced not only hundreds of thousands of residents but many businesses as well.” Stephen Malanga, Senior Fellow at the Manhattan Institute.
“Within a few years, entire communities will be without basic amenities such as supermarkets and drugstores and shopping districts will be filled with vacant storefronts,” Malanga predicted.
