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"Walmart And Other Major Retail Brands
Are Closing Stores As Hard Times Approaching"
by Epic Economist
"Walmart, Target, Rite Aid, Home Depot, CVS, Walgreens, Best Buy, and many other big brands are now threatening to close stores due to an industry-wide problem that is causing major losses to retailers and severe consequences for their customers. According to several reports, the holiday season is making things exponentially worse, and experts note that many companies will be forced to raise prices even further to offset their losses or face the risk of going out of business in the months ahead.
Last week, Walmart joined the growing list of retailers being plagued by raging theft amid the busiest shopping season of the year. In the past few months, big pharmacy chains like CVS, Rite Aid, Walgreens, and retail giants including Kroger, Target, Best Buy, and Home Depot, all publicly cited shoplifting concerns and reported acute financial losses.
In the retail world, shoplifting is often referred to as “shrinkage” and this year, shrinkage is biting a big chunk out of retailers’ profits. Over the past twelve months, rising retail theft cost the industry $94.5 billion in losses, nearly double the amount from a couple of years ago, according to data from the National Retail Federation. In fact, last month, Target CFO Michael Fiddelke said that the company expects to lose over $600 million in gross profit by the end of the year due to shrinkage from shoplifters, "This is an industry-wide problem that is often driven by large networks of offenders," Fiddelke stressed.
"It's a misdemeanor. It's not a felony. So, people are using theft as a business to fund other illegal activities because there's not a penalty for it," emphasized California Retailers Association President Rachel Michelin. Given that shoplifting isn’t a priority in the justice system, big retailers are forced to hire loss-prevention specialists to combat the issue themselves. And that’s all at the company’s expense.
Walmart CEO Doug McMillon said the big box retailer would close several stores if thefts continue to plague those locations. Right now, Walgreens is actually in process of closing five locations in San Franciso, where the rate of shoplifting turned stores unprofitable. Since 2019, more than 10 Walgreens stores in the city here shut down due to the same reason.
The latest events have alarmed Home Depot CEO Bob Nardelli, who said last year that retail theft was an epidemic, that was spreading faster than COVID. “Our associates are afraid. The retail salespeople are afraid. Consumers are afraid. We’ve got to get control of this. And if the administration doesn’t get control of this, they’re abdicating it to the businesses, both public and private,” stresses the CEO.
Researchers with the Heritage Foundation warned that the surge in organized retail theft will shutter storefronts and further increase consumer prices. "If companies can't increase their costs to cover the cost of the theft, if they're not making a profit, then they're going to go out of business,” Puzder alerts. Stores in cities where the issue is rampant are left with two options: further hike up prices to cover the cost of theft or close locations struggling to turn a profit, said Joel Griffith, a Heritage research fellow."The companies have to make up for that loss somehow," Griffith explains.
The problem is getting worse by the day, and it’s spreading all over the industry. And even though big brands are seeing their balance sheets being impacted by this wave of organized robbery, at the end of the day, the hardest hit will be ordinary Americans, who may lose access to their favorite stores and cope with skyrocketing prices that never seem to stop rising."
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