Target has absolutely cited rising violent thefts & threats-of-violence in their stores, for example in their August earnings call. (And, if a particular release mainly mentions 'safety', what is that 'safety' from, if not violence?)
Is Biden's Department of Health & Human Services making up false "easy & simple boogeyman" stories about the neighborhood situation? Do they deserve blame because they "haven’t even gotten the authorities involved"?
This is an interesting ad unique analysis and I like it a lot. But one thing it might be missing is some mention of profit margins. According to Google, profit margins in retail typically range from 0.5% to 3.5%. An assumption embedded in this analysis is that all Target stores have the same margins, and so the stores with the worse theft should shut down. But it's safer to assume that margins vary store-to-store for all kinds of reasons, including theft, and some of the stores with the worst theft may be the most profitable for other reasons and vice versa.
According to Target, their losses from theft almost doubled last year from 500-700 million to 1-1.2B, which is around 0.5% of total revenue. And that comes on the heels of big increases in 2021 and 2022. That might be enough to wipe out profits in some stores where margins were already thin, even if they weren't the stores with the worst theft losses.
Interesting, but I think that NIBRS data is becoming more unreliable. I've found this trying to do analysis of traffic crashes in my locale. It's clear that, for various reasons, fewer and fewer are even reported to the police. I've been trying to get my hands on insurance days to get around this issue. I posit that people will be far more likely to report a crash to their insurance company.
I don't think we can really come to any conclusion without seeing their internal data. To claim either rising crime or not is the reason is equally as inconclusive.....
Great topic, and thanks for this analysis, I think I can try to replicate this with Police incident data where I live - if I can find Target, or any other major retailer, with some locations that are closing.
For what it is worth, here's a summary of background reading/research I have done on this topic, as it's come to my attention in the last few weeks.
*The* industry report - the National Retail Foundations 'Retail Security Survey' for 2023 (the methods for which I would not describe as 'rigorous') has the following to say :'On average, retailers reported inventory shrink of 1.6%, which is slightly up from last year and in line with shrink rates in 2019 and 2020.'
The term 'shrink' refers to the combined loses from internal and external theft as well damage and system mistakes. Basically the industry itself reports that from a dollars perspective this year's loss really isn't all that much worse than any of the last few years. So for 2022 the total shrink in dollars, was $112.1 billion, up from $93.9 billion in 2021. Huge numbers for sure, but they represent 1.6% - 1.4% of total sales. Note that about two-thirds of these totals represent internal and external theft.
According to survey results retailers are reporting that violence and threat of violence are escalating, and those retailers that specifically track the number of violent shoplifting incidents reported that they saw their number of shoplifting events involving violence increase by 35% on average.
Specific actions retailers reported in response to this loss and increasing violence were to 1) reduce specific store(s) operating hours (45.3%) 2) reduce/alter in-store product selection(s) (29.7%) and 3) *closing specific store location(s) * (28.1%) {emphasis added}.
Perhaps they feel that crime has been going on long enough, and these stores have been underperforming so long the company no longer wants to carry their load. They would not have to say crime was increasing in that event. You have to look at the closing store year-over-year performance and the shrinkage numbers for those nine stores to get a clearer picture of what’s going on...
How can the data be reliable when the benefit for reporting crimes is declining?
The "benefit" I reference above is the possibility of the criminal being identified, caught, prosecuted and then incarcerated. If any part of the above chain is unreliable, then the benefit disappears as does the incentive to report crime.
I live in downtown SF - and the fact of crime is that it is enormous and increasing. The 2 Safeway stores in the bad parts of town, that I frequent, are literally like a prison: I was trapped once because there is no way to exit the store, after passing through the one-way entry gates, without having a receipt for having bought something (I went inside to look for one specific sale item which was out of stock). All exits are blocked by large automated steel doors. The 3rd one that I frequent has 3 full time security guards who are kept very busy... and I know why. This store has a discount bin for items that are being discontinued; I always swing by to see what might be a good deal. But this spot is also where the criminals go to hide their stolen items in preparation for exfiltration. Just last week, a young guy in a leather jacket was standing in front of the bin, but not actually looking at any of the items. After I made my purchases and left the store - this guy sauntered up late to my almost departing public transit, banged his way aboard and then proceeded to unload all manner of items from inside his jacket and backpack ranging from a plastic container of pasta to a bag of frozen shrimp. I don't know for 100% certain these were stolen, but the likelihood is overwhelming...
Equally, the 2nd to last CVS in the downtown area is going to close on 10/21. This place was constantly getting its windows/glass door broken such that they just left the wooden covers in place permanently for the door. This CVS is so hit by crime that they literally are unreliable for having anything in stock that isn't food or locked up (i.e the thieves aren't stealing food). The employees have told me that they even know who the criminals are - many of them are coming every day like a job.
The 3rd to last CVS that already closed - apparently the last straw was when the criminals literally stole all their cash registers.
So while some of the calculations behind store closures are probably a function of WFH impacting traffic and store turnover, there is no question whatsoever that crime is a huge factor and very likely a greater one than any of the others.
I live up the street from the Seattle downtown target. That’s by far the worst in terms of surrounding area, and they definitely aren’t closing it. They use it as a same day distribution center to compete with Amazon.
The crime in that area is the standard leftcoast public drug crime. It’s unpleasant to go there, so I’m sure foot traffic has dropped, but it’s not on of the ones closing. Just the ones in the suburban lite Ballard and the previously mentioned micro retail in the college town neighborhood.
The seattle times article is titled:
As Seattle Targets close, shoppers question if crime really is to blame
Thanks for this analysis. Target may be cloaking their closings to draw attention away from other fundamental performance issues. Wanna-believe-ism is just a prevalent in the C-suite as anywhere else. More so in some cases because executives are so tuned into quarterly stock price changes.
To me "increasing crime" or "organized shoplifiting gangs" is generally used as a sub rosa racist strawman for other, real-er, factors such as, say, union activity..
Ok, Retail and POS data analyst here. Also Black. Our key metrics are foot traffics (we have foot level scanners at the door), sales per sq. foot, avg. basket, personnel costs and shrink. We can only tell later when we "true-up" inventory if something is missing (damage, scrap, mis-shipment or mislabeling, employee theft or shoplifting). My guess is the space was too large 175,00 feet and they had a low-margin product mix. You would not believe how tight margins are in some stores. (0.5%). So what I see is Target simply closing a marginal store. Meanwhile Costco downstairs seems to do fine. As does Target in the Bronx.
I am disappointed with Target blaming crime only as the reason for closing the store. They are actually impinging a whole neighborhood and all the people who live there. And the media jumped on it. It gave them a splashy headline. Target is opening a smaller store in 125th St. near Whole Foods.
Basically, Target was irresponsible and showed really poor corporate behavior. And we went along for the ride. Until we can better counter act the "corporate" version of the story, we are spitting into the wind.
Keeping the staff safe from all the calm, gentle customers that are only there to pickup something for the daily lunch at the shelter, I guess.
I was having coffee with a friend yesterday and this subject came up. I said if I was running Target there would not be a Target store left open in New York City, San Francisco, Portland, or Seattle. Those cities, and others, need to get order reestablished. If I had any push-back there might not be a store in New York state, California, Oregon, or Washington.
One of the stores closing in Seattle is quite small, and has only self-checkout. I have also never seen it crowded. It is in the University district, so most of its customers would be students.
Target has absolutely cited rising violent thefts & threats-of-violence in their stores, for example in their August earnings call. (And, if a particular release mainly mentions 'safety', what is that 'safety' from, if not violence?)
Anyone familiar with the area where the SF Target is closing will have no doubts about the veracity of their reports: https://www.sfchronicle.com/sf/article/s-f-target-store-closing-crime-chop-shops-18390645.php
Just 6 blocks away from the Folsom St Target is the Nancy Pelosi Federal Building - where the federal government itself recently urged its employees to work-from-home as much as possible, to avoid crime risks in the surrounding area: https://www.sfchronicle.com/sf/article/drugs-crime-nancy-pelosi-federal-building-18292237.php
Is Biden's Department of Health & Human Services making up false "easy & simple boogeyman" stories about the neighborhood situation? Do they deserve blame because they "haven’t even gotten the authorities involved"?
This is an interesting ad unique analysis and I like it a lot. But one thing it might be missing is some mention of profit margins. According to Google, profit margins in retail typically range from 0.5% to 3.5%. An assumption embedded in this analysis is that all Target stores have the same margins, and so the stores with the worse theft should shut down. But it's safer to assume that margins vary store-to-store for all kinds of reasons, including theft, and some of the stores with the worst theft may be the most profitable for other reasons and vice versa.
According to Target, their losses from theft almost doubled last year from 500-700 million to 1-1.2B, which is around 0.5% of total revenue. And that comes on the heels of big increases in 2021 and 2022. That might be enough to wipe out profits in some stores where margins were already thin, even if they weren't the stores with the worst theft losses.
Interesting, but I think that NIBRS data is becoming more unreliable. I've found this trying to do analysis of traffic crashes in my locale. It's clear that, for various reasons, fewer and fewer are even reported to the police. I've been trying to get my hands on insurance days to get around this issue. I posit that people will be far more likely to report a crash to their insurance company.
I don't think we can really come to any conclusion without seeing their internal data. To claim either rising crime or not is the reason is equally as inconclusive.....
Great topic, and thanks for this analysis, I think I can try to replicate this with Police incident data where I live - if I can find Target, or any other major retailer, with some locations that are closing.
For what it is worth, here's a summary of background reading/research I have done on this topic, as it's come to my attention in the last few weeks.
*The* industry report - the National Retail Foundations 'Retail Security Survey' for 2023 (the methods for which I would not describe as 'rigorous') has the following to say :'On average, retailers reported inventory shrink of 1.6%, which is slightly up from last year and in line with shrink rates in 2019 and 2020.'
The term 'shrink' refers to the combined loses from internal and external theft as well damage and system mistakes. Basically the industry itself reports that from a dollars perspective this year's loss really isn't all that much worse than any of the last few years. So for 2022 the total shrink in dollars, was $112.1 billion, up from $93.9 billion in 2021. Huge numbers for sure, but they represent 1.6% - 1.4% of total sales. Note that about two-thirds of these totals represent internal and external theft.
According to survey results retailers are reporting that violence and threat of violence are escalating, and those retailers that specifically track the number of violent shoplifting incidents reported that they saw their number of shoplifting events involving violence increase by 35% on average.
Specific actions retailers reported in response to this loss and increasing violence were to 1) reduce specific store(s) operating hours (45.3%) 2) reduce/alter in-store product selection(s) (29.7%) and 3) *closing specific store location(s) * (28.1%) {emphasis added}.
Perhaps they feel that crime has been going on long enough, and these stores have been underperforming so long the company no longer wants to carry their load. They would not have to say crime was increasing in that event. You have to look at the closing store year-over-year performance and the shrinkage numbers for those nine stores to get a clearer picture of what’s going on...
How can the data be reliable when the benefit for reporting crimes is declining?
The "benefit" I reference above is the possibility of the criminal being identified, caught, prosecuted and then incarcerated. If any part of the above chain is unreliable, then the benefit disappears as does the incentive to report crime.
I live in downtown SF - and the fact of crime is that it is enormous and increasing. The 2 Safeway stores in the bad parts of town, that I frequent, are literally like a prison: I was trapped once because there is no way to exit the store, after passing through the one-way entry gates, without having a receipt for having bought something (I went inside to look for one specific sale item which was out of stock). All exits are blocked by large automated steel doors. The 3rd one that I frequent has 3 full time security guards who are kept very busy... and I know why. This store has a discount bin for items that are being discontinued; I always swing by to see what might be a good deal. But this spot is also where the criminals go to hide their stolen items in preparation for exfiltration. Just last week, a young guy in a leather jacket was standing in front of the bin, but not actually looking at any of the items. After I made my purchases and left the store - this guy sauntered up late to my almost departing public transit, banged his way aboard and then proceeded to unload all manner of items from inside his jacket and backpack ranging from a plastic container of pasta to a bag of frozen shrimp. I don't know for 100% certain these were stolen, but the likelihood is overwhelming...
Equally, the 2nd to last CVS in the downtown area is going to close on 10/21. This place was constantly getting its windows/glass door broken such that they just left the wooden covers in place permanently for the door. This CVS is so hit by crime that they literally are unreliable for having anything in stock that isn't food or locked up (i.e the thieves aren't stealing food). The employees have told me that they even know who the criminals are - many of them are coming every day like a job.
The 3rd to last CVS that already closed - apparently the last straw was when the criminals literally stole all their cash registers.
So while some of the calculations behind store closures are probably a function of WFH impacting traffic and store turnover, there is no question whatsoever that crime is a huge factor and very likely a greater one than any of the others.
I live up the street from the Seattle downtown target. That’s by far the worst in terms of surrounding area, and they definitely aren’t closing it. They use it as a same day distribution center to compete with Amazon.
The crime in that area is the standard leftcoast public drug crime. It’s unpleasant to go there, so I’m sure foot traffic has dropped, but it’s not on of the ones closing. Just the ones in the suburban lite Ballard and the previously mentioned micro retail in the college town neighborhood.
The seattle times article is titled:
As Seattle Targets close, shoppers question if crime really is to blame
Thanks for this analysis. Target may be cloaking their closings to draw attention away from other fundamental performance issues. Wanna-believe-ism is just a prevalent in the C-suite as anywhere else. More so in some cases because executives are so tuned into quarterly stock price changes.
Most Targets I've been in, if there weren't shoplifters there, the store would be empty.
You have to shoplift to afford Target--that's a part of their problem.
To me "increasing crime" or "organized shoplifiting gangs" is generally used as a sub rosa racist strawman for other, real-er, factors such as, say, union activity..
jes' sayin'....
Ok, Retail and POS data analyst here. Also Black. Our key metrics are foot traffics (we have foot level scanners at the door), sales per sq. foot, avg. basket, personnel costs and shrink. We can only tell later when we "true-up" inventory if something is missing (damage, scrap, mis-shipment or mislabeling, employee theft or shoplifting). My guess is the space was too large 175,00 feet and they had a low-margin product mix. You would not believe how tight margins are in some stores. (0.5%). So what I see is Target simply closing a marginal store. Meanwhile Costco downstairs seems to do fine. As does Target in the Bronx.
I am disappointed with Target blaming crime only as the reason for closing the store. They are actually impinging a whole neighborhood and all the people who live there. And the media jumped on it. It gave them a splashy headline. Target is opening a smaller store in 125th St. near Whole Foods.
Basically, Target was irresponsible and showed really poor corporate behavior. And we went along for the ride. Until we can better counter act the "corporate" version of the story, we are spitting into the wind.
This is from Oct 5 and I'm guessing you saw it, but ... https://popular.info/p/target-says-its-closing-9-stores
I don’t believe them for a hot minute. C-suites will glom onto literally ANY narrative with currency to justify decisions already long in the making.
"(Target repeatedly cited safety, not violence)"
Keeping the staff safe from all the calm, gentle customers that are only there to pickup something for the daily lunch at the shelter, I guess.
I was having coffee with a friend yesterday and this subject came up. I said if I was running Target there would not be a Target store left open in New York City, San Francisco, Portland, or Seattle. Those cities, and others, need to get order reestablished. If I had any push-back there might not be a store in New York state, California, Oregon, or Washington.
One of the stores closing in Seattle is quite small, and has only self-checkout. I have also never seen it crowded. It is in the University district, so most of its customers would be students.