With the holidays around the corner and many students back at school, 2023's shopping season is officially in session.
Plenty of big-box retailers are anticipating a big season of spending, as interest rates are cooling and travel is back in full swing. If Amazon's (AMZN) -) blockbuster Prime Day was any indicator, we could be in for a red hot Q4 of consumer outlays.
DON'T MISS: Target Brings Back Popular Deals (and One Very Special Offer)
But with increased foot traffic in stores have come other, less savory matters as well. Some retailers have noticed (and called out) the uptick in shoplifting and other criminality in some of their stores, especially after the pandemic.
Many of these locations are in particularly densely populated urban locations that attract lots of daily visitors.
Walgreens (WBA) -), for example, has taken to chaining up some of its high-interest items it sees stolen in cities like San Francisco. The drugstore also launched a 2023 program whereby only two aisles of essentials are available for in-person shopping, and you order the rest via kiosk and wait for an employee to bring you the items.
Target CEO Brian Cornell explained on the retail giant's Aug. 19 Q2 earnings call that the chain is grappling with "an unacceptable amount of retail theft and organized retail crime."
"Shrink in the second quarter remained consistent with our expectations but well above the sustainable level where we expect to operate over time," he said.
Walmart (WMT) -) and Home Depot (HD) -) have voiced similar complaints, calling inventory shrink, or the industry term for theft, unsustainable.
Inventory shrink and a rise in violence
Joining the ranks of beleaguered retailers this month is Dick's Sporting Goods (DKS) -), which reduced its full-year earnings forecast "due in large part to the impact of elevated inventory shrink, an increasingly serious issue impacting many retailers," per CEO Lauren Hobart.
Dick's now expects its earnings-per-share to clock in at 12% below initial expectations. Q2 results show the retailer saw a 23% decrease in profit.
"We thought we had adequately reserved for it. However, the number of incidents and the organized retail crime impact came in significantly higher than we anticipated, and that impacted our Q2 results as well," Dick's Chief Financial Officer Navdeep Gupta explained.
And inventory shrink is just one problem. Retailers are citing violent crime as a rising issue in stores, too.
Target has seen a more than doubling (120% increase) in violence in stores, from violent thefts, threats, or other incidents, Cornell said.
A recent Retail Workplace Survey by Loss Prevention Magazine shows that 60% of retail workers saw some form of violence on the job over the past 12 months. Here's how that breaks down:
- 23% of those surveyed said they were a victim of verbal assault
- 14% said they were a victim of physical assault
- 10% said they were the victim of bullying or emotional assault
- 3% said they were the victim of a sexual assault
“Incidents involving shoplifters are growing in terms of risks to employees interacting with individuals with malicious intent,” one respondent said.
“Many weapon-related [incidents with] pepper spray, verbal, and even physical abuse of employees continues to grow.”
Action Alerts PLUS offers expert portfolio guidance to help you make informed investing decisions. Sign up now.
