Target Corp. said on Tuesday that it plans to close nine stores in four major cities as it faces waves of organized crime and theft.
Effective Oct. 21, the company will close nine Target stores across four states, including one in New York, N.Y., two in Seattle, Wash., three in San Francisco/Oakland, Calif. and three in Portland, Ore.
The retailer said in a statement that it made the decision to close these stores to prioritize the safety of its customers and employees.
“We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance,” Target said. “We know that our stores serve an important role in their communities, but we can only be successful if the working and shopping environment is safe for all.”
Target, along with other major retailers, has recently seen a massive increase in retail shrink — or when stores have fewer products than recorded in inventory books, largely driven by organized retail crime.
Last month, Target CEO Brian Cornell told analysts on the company’s most recent earnings call that the retailer continued to face an “unacceptable amount” of 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,” Cornell said. “And unfortunately, safety incidents associated with theft are moving in the wrong direction.”
Cornell added that during the first five months of this year, Target stores saw a 120 percent increase in theft incidents involving violence or threats of violence. “As a result, we’re continuing to work tirelessly with retail industry groups and community partners to find solutions to promote safety for our store teams and our guests,” the CEO added.
And in May, after reporting earnings for the first quarter, Target said it expected a $500 million hit to profitability this year compared with the prior year due to shrink. Last year, Target noted that shrink impacted its gross margin by at least $400 million.
Also on Tuesday, the National Retail Federation released data that showed that retailers have seen a dramatic jump in financial losses associated with theft in 2022. When taken as a percentage of total retail sales in 2022, shrink accounted for $112.1 billion in losses, up from $93.9 billion in 2021, according to the 2023 National Retail Security Survey released by NRF.
According to the survey, the average shrink rate in fiscal year 2022 increased to 1.6 percent, up from 1.4 percent the previous year. On par with previous years, internal and external theft accounted for nearly two-thirds (65 percent) of retailers’ shrink.
Other retailers have recently made the decision to retreat from certain markets in the wake of heightened retail crime waves. Nordstrom last month officially shut the doors on two of its stores in downtown San Francisco, including a flagship location, as crime and safety issues continue to impact the city. Cotopaxi also closed its San Francisco store last year.
