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Walmart inventory shrinkage2/12/2024 In his testimony, Dugan said that ORC accounted for $45 billion in annual losses for retailers, according to the coalition's estimates. ![]() Senate testimony given in 2021 by Ben Dugan, a current asset protection executive at CVS Health and the former president of advocacy group the Coalition of Law Enforcement and Retail. NRF spokesperson Mary McGinty told CNBC it was based on U.S. The NRF retracted the claim after an investigation from Retail Dive published at the end of November revealed the discrepancy. It includes petty shoplifting incidents, which retailers usually say they are not as concerned about. Retailers often point to it as one of the biggest issues affecting their stores, associates and profitability, and are mounting a concerted lobbying campaign to convince state and federal lawmakers to pass laws that would bring harsher penalties for organized theft offenses.Įxternal theft, on the other hand, includes any goods stolen by someone who doesn't work for the retailer. Typically, organized retail crime refers to incidents that involve coordinated groups of people who shoplift from stores and then resell the items either online or in informal street and flea markets. That claim contradicted the NRF's own annual shrink survey that showed all external theft – not just incidents related to organized groups – accounted for just 37% of those losses in 2021. In April, the NRF published a report about organized retail crime in conjunction with private security firm K2 Integrity that claimed "nearly half" of the estimated $94.5 billion that retailers said they lost to shrink in 2021 "was attributable" to ORC. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Walgreen’s has also taken to chaining up some inventory or only keeping certain items on the floor while the rest is kept in the back for employees to retrieve when a customer checks out, according to Debt Consolidation Loans for Bad Credit So we have a lot of things in the works," as reported by CBS. And even to the point where we have some stores that can't keep a certain SKU on the shelf just discontinuing the item. It has to do with some cases being locked up. Dick’s CFO added that “the number of incidents and the organized retail crime impact came in significantly higher than we anticipated.”ĭick’s noted a 23% drop in profit-despite sales that rose 3.6% in the same period-in last week’s earnings report, according to CNN.Ī substantial dip in Dollar Tree’s gross profit margin last quarter from 32.7% to 29.8% year over year was also attributed to theft by CEO Richard Dreiling and CFO Jeffrey Davis, according to CBS News.ĭreiling explained a plan for the last half of the year to address the shrink problem, "We are now taking a very defensive approach to shrink. We have several new shrink formats that we'll introduce in the back half of the year, and it goes everything from moving certain SKUs to behind the check stand. “Second-quarter earnings were dented by higher inventory shrink, organized retail crime and theft in general, an increasingly serious issue impacting many retailers,” Dick’s CEO Lauren Hobart said on an earnings call. Brian Cornell, CEO of Target, noted in a May earnings report that shrink was expected to reduce profits by more than $500 million this year as compared to last, according to Newsweek. While smaller mom-and-pop stores have felt the effects of the surge in theft too, some big-box stores, like Dick’s Sporting Goods and Target, are expecting their figures to reflect the rising theft. Now they can’t afford basic necessities,” said Read Hayes, criminologist at the University of Florida and director of the Loss Prevention Research Council, which has members including retailers such as Walmart, Target, Home Depot and Gap. The group said retailers on average saw a 26.5% increase in this type of theft over the previous year,” according to CNN Business.ĬNN Business mentions the struggling economy as a potential reason for the rise, “A community might be struggling with heavy job losses and people can’t easily find another job. Nearly half was attributed to large-scale theft of products. “The National Retail Federation (NRF) estimates total annual shrink reached $94.5 billion in 2021, up from $90.8 billion from 2020. There have been reports of smaller pilfering events all the way to organized retail crime (ORC) with mobs coming into stores in a mad dash to grab what they can and run out as quickly as possible-a lot of incidents have even been recorded by awe-struck customers and then picked up by local and national news. ![]() ![]() ![]() Shrink is getting too big to overlook with nationwide reports of shoplifting and huge profit losses for retailers.
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