Target CEO reveals urgent issue affecting shopper experience – it could even put customers in danger
TARGET has spoken out amid rising theft levels as shrinkage could see the company lose $500million this year.
The CEO called high theft levels and the subsequent losses an urgent issue in a new statement.
Brian Cornell announced that shrinkage is putting "significant pressure" on the company's finances.
If the current pattern continues, the company's profitability will reduce by over $500million compared to last year's figures, according to Target.
While the company had an operating income in the first quarter that was 5.2 percent higher than expected, shrinkage reduced its gross margin by a percentage point, according to Target's Chief Financial Officer.
Last year, the retailer saw a reduction in profit of $700 million due to theft.
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As figures currently stand, Target will lose $1.2billion from shrinkage in two years.
The Target CEO warned that higher rates of "violent incidents" are putting staff and customers at risk, as well as the company's future.
In an earnings call last week, Cornell said: "The unfortunate fact is, violent incidents are increasing at our stores and across the entire retail industry.
"And when products are stolen, simply put, they're no longer available for guests who depend on them.
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"And left unchecked, theft and organized retail crime degrade the communities we call home.”
In order to limit theft and increase safety, Target is implementing various new measures including "significant resource investments."
Cornell noted that stores have increased security measures including installing more fixtures to protect produce and "adjusting our assortment in affected stores."
However, a number of customers have complained about the additional issues the extra security measures bring to their shopping experience,
The CEO has placed himself alongside other retail leaders including Walmart CEO Doug McMillon who previously warned about theft impacting the retail industry.
McMillon told CNBC: “Theft is an issue. It’s higher than what it has historically been.”
He feared that customers could see prices rise if local prosecutors were not strong enough on shoplifting offenses.
Walmart resorted to strategies such as storing items behind plexiglass or putting them in a glass cabinet.
Cornell warned that retailers cannot tackle the threats independently.
“While we’re doing all we can to address the problem, it’s an industry and community issue that can’t be solved by a single retailer,” he said.
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He added: “We’ll be closely monitoring the safety of our team and guests, as well as the financial impact to our business as we determine the right path forward at Target.”
The retailer is working with law enforcement, legislators, and retail partners to tackle organized crime.