Retailers Increasingly Challenged by Theft, Organized Retail Crime

Retail theft and organized retail crime (ORC) have been cited as serious problems and the leading cause of inventory shrink by leading retail CEOs during first quarter earnings calls and media interviews over the past week. Indeed, retailers are being hit with a large number of thefts and in some cases are closing stores and pulling out of geographic markets because of massive losses, some tied to criminal gangs. The issue has received more notice in the past few years as high-profile smash-and-grab retail thefts and flash mob robberies have garnered national attention.

“The country has a retail theft problem,” Richard McPhail, Home Depot's CFO, said on a call with CNBC on Tuesday after its earnings were published. “We’re confident in our ability to mitigate and blunt that pressure, but that pressure certainly exists out there.”

In addition, Target said it expects retail theft will reduce its 2023 profitability by more than $500 million compared to last year, according to the retailer’s Q1 earnings report. Target lost almost $800 million from theft last year.

What's more, in an appearance on CNBC last week, National Retail Federation (NRF) President Matt Shay said the issue isn’t going away. “Conversations we’ve had with members over the last several years indicate it's getting to be a really acute and serious problem,” said Shay.

Total Retail's Take: So, what are retailers doing to mitigate this problem? Target, for one, has adopted several mitigation efforts, including investing in safety resources, installing fixtures to protect merchandise, and adjusting product assortment, Brian Cornell, Target’s chairman and CEO, said during the Q1 earnings call.