The dramatic increase in shoplifting in brick-and-mortar stores, well documented by the media, could have a serious impact on the viability of brick-and-mortar stores in the future.
Several chains have said these thefts – often by flash mobs – have had serious consequences their financial results and some have even closed locations in the aftermath. In September, Doel (NYSE: TGT) Target announced it would close nine stores due to theft and organized retail crime affecting the safety of its employees and customers.
Retailers including Target (TGT), Dick’s Sporting Goods (NYSE: DKS), Lowe’s Companies (NYSE:LOW) and Macy’s (NYSE: M) have pointed to an increase in crime as a factor in lower revenues and noted that the issue could continue to weigh on their financial results.
In September, the National Retail Foundation reported that shoplifting was up ~20% in 2022 from a year earlier. As a percentage of total retail sales in 2022, the contraction was responsible for $112.1 billion in losses, up from $93.9 billion in 2021, according to the 2023 National Retail Security Survey.
The current situation is probably already leading to less traffic in stores. A recent US consumer survey from GlobalData shows that the number of older Americans shopping online will more than double between 2022 and 2023, from 19% to 42%.
While many older shoppers are skittish about in-person shopping due to COVID-19 concerns, “an increasing wave of violent retail crime will push many older shoppers to choose other retail options, such as online shopping, a channel they are already increasingly using ,” said GlobalData. Retail Consultant Consumer Custom Solutions Anoop Kumar.
The consulting and analytics firm noted that retailers are increasingly turning to technology as a way to reduce theft. This includes AI-powered analytics and radio frequency identification (RFID) inventory tracking. Some use overhead cameras, trolley locks, smart gates and fog machines.
BJ’s Wholesale Club (BJ), Lowe’s (LOW) and IKEA are also using autonomous robots and drones to track inventory and patrol parking lots to improve store safety and protect customers and employees.
But GlobalData points out that there are disadvantages to taking these measures. This includes a negative impact on customer service and an atmosphere of distrust.
“The practice of confining merchandise or keeping inventory in separate fulfillment areas significantly reduces impulse purchases and customer purchases in general due to the inconvenience,” the company noted.
“While adoption of advanced technologies is crucial in addressing the issues, a delicate balance needs to be struck to maintain customer service, sales and margins,” Kumar added.