Target Store Closures: Uncovering the Truth Behind Theft Allegations
Target recently made big headlines with the announcement that it would be closing nine stores across four major markets: New York City, the San Francisco Bay Area, Portland, Oregon, and Minneapolis. The reason given was clear and direct: theft and safety concerns had made these locations untenable.
This immediately sparked a national conversation, seemingly confirming fears about rising retail crime preventing businesses from operating. On the surface, Target’s statement acted as powerful evidence that retail theft, particularly organized retail crime, was directly impacting major corporations and forcing difficult decisions like store shutdowns.
However, a deeper look into available data and expert analysis suggests that the picture might be more complex than the initial headline grabbing announcement implied. While theft is undoubtedly a real issue for retailers, its overall impact on the bottom line might not be the sole driver behind these specific closures, prompting some fascinating questions about corporate strategy and public messaging.
Let’s dive into some industry-wide numbers. The National Retail Federation (NRF) conducts an annual security survey, offering insights into the challenges facing retailers. One key metric is the inventory shrink percentage, calculated at retail. Looking at the NRF’s 2022 survey, based on fiscal 2021 data, the average shrink percentage was 1.4 percent, with a median of 1.2 percent. What’s truly striking? These figures are identical to those reported in fiscal 2016. This suggests that overall retail shrink has remained remarkably stable over the past seven years.
The NRF report also breaks down the sources of inventory shrink. In 2021, external theft, including organized retail crime, accounted for 37 percent of shrink. But here’s another important detail: employee or internal theft was responsible for 28.5 percent. Process and control failures made up 25.7 percent, and other or unknown sources the remaining 8.9 percent. This shows that employee theft is nearly as big a problem as customer theft, a factor that often receives less public attention.
While overall shrink percentages appear stable, the NRF survey did highlight one area of significant concern: violence. The reported increase in the risk of violence since the pandemic is a shocking 89.7 percent. This isn’t limited to customer interactions; employee-on-employee violence is also a major concern. So, while theft’s financial impact on overall shrink might be consistent, safety concerns related to violence have indeed seen a dramatic rise.
Enter the investigation by CNBC, which took a close look at the specific stores Target decided to close compared to others nearby that remained open. Using public records and law enforcement data, CNBC obtained crime statistics for 21 Target stores in the four affected regions, spanning from January 2021 through September 2023. This data included reported incidents that led to arrests, police reports, or official logs.
The findings from this analysis present a clear trend that prompts significant questions about Target’s stated reason for the closures. Nearly every store the retailer closed saw less police activity and fewer reported crime incidents than the locations it chose to keep open nearby. In fact, only one of the nine closed stores across the four regions (a location in Pittsburg, California) saw more crime and police activity than its closest comparable store (in Antioch, California).
Read more about: Locked Up: How Retailers Are Fighting Theft, Leaving Shoppers Frustrated
Data Contradiction: Closed Stores Had Lower Crime Rates Than Nearby Locations
This finding casts considerable doubt on Target’s explanation that these specific stores were being closed *because* theft and crime were making them unsustainable. Experts weighed in on this discrepancy. Christopher Herrmann, an assistant professor at John Jay College of Criminal Justice and an expert in crime analysis, noted, “It’s interesting that they’re using public safety, or employee safety, as an excuse, kind of, for closing the stores. Because the reality is, they’re not closing the stores with the highest rate of retail theft.”
So, if the data doesn’t strongly support higher crime rates at the closed stores compared to nearby open ones, what else could be driving these decisions? The CNBC investigation and other commentators suggest several possibilities. One is that the announcement was designed to advance Target’s legislative agenda, particularly lobbying efforts for tougher laws against organized retail crime. The closure announcement came just hours after the NRF issued its security survey and one month before the trade group planned to lobby Congress on organized theft offenders. Target CEO Brian Cornell sits on the NRF’s board and executive committee, adding another layer to this timing.
Another potential factor is obscuring poor financial performance. Target’s sales had fallen from the prior year in both its second and third quarters. Mark Cohen, a professor and director of retail studies at Columbia Business School and former retail CEO, questioned Target’s claims, suggesting they might be designed to “divert attention from the company’s lack of performance overall.” He pointed out that Target didn’t disclose specific shortage statistics for the closed stores or other potential reasons for closure, implying theft was the *only* reason.
Read more about: San Francisco Downtown Fights for Future as Retail Exits, Office Vacancies Soar, and Business Costs Rise
Many of the locations Target closed were “small-format” stores opened in dense urban areas over the last five years as part of an experimental expansion strategy. Target had previously closed four similar underperforming small-format stores in the spring. It’s possible these newer, smaller stores simply weren’t performing as well financially as expected, regardless of theft levels.
The CNBC investigation also revealed that in some cases, Target opted to keep open stores in busier areas with better foot traffic or higher median incomes, even if those locations saw more reported theft and violence. For example, in the San Francisco Bay Area, a closed store in Oakland had 96 reported crime incidents between January 2021 and September 2023, while the nearby Emeryville store that remained open had 440 incidents in the same period. The median income in the Oakland store’s ZIP code was significantly lower ($76,953) than in Emeryville ($114,286). Similar patterns were observed in Portland, Seattle, and New York City, where closed stores often had fewer incidents than higher-traffic or higher-income locations that remained open.
Target has pushed back on the idea that theft wasn’t the primary driver for these specific closures. Target spokesperson Jim Joice stated that “store-level incidents vary widely in severity, and police data won’t show the full extent of what our teams experience on the ground.” He reiterated Target’s position that theft and organized retail crime *are* contributing to “unsustainable business performance” and threatening safety at these locations, regardless of how police incidents compare to other stores.
Read more about: San Francisco Downtown Fights for Future as Retail Exits, Office Vacancies Soar, and Business Costs Rise
Business Strategy Mystery: Dual Motivations of Financial Performance and Legislative Lobbying
The company also maintains it has seen a “marked increase” in theft involving violence or threats, reporting a nearly 120% increase in such incidents in the first five months of this year compared to the same period in 2021 and 2022. Target emphasized its continued investment in safety, theft prevention strategies, and partnerships with law enforcement and legislators to find long-term solutions.
It’s worth noting that Target has sounded the alarm about organized retail crime before, notably around 2008 during the Great Recession. This historical pattern raises questions about whether the emphasis on theft peaks during times of economic pressure or shifting corporate performance.
Interestingly, despite the narrative of rampant theft crippling operations, Target has made record profits in recent years, including over $31 billion last year. Some commentators have pointed out that the retailer is reportedly on track for even better performance this year. This makes the claim that theft alone is forcing profitable stores to close seem contradictory to the company’s overall financial health.
The situation at Target also draws parallels to Walmart’s recent decision to close several stores in Chicago, which some observers linked to retail theft. However, Walmart’s official reason was simply that the stores weren’t profitable, avoiding a direct blame on theft. This contrast highlights how different retailers frame their closure decisions.
Industry Perspective: Truth and Public Opinion in the Retail Closure Trend
The question also lingers about the role of technology like automated checkout, which some believe could heighten possibilities for retail theft. While the context doesn’t provide specific data on whether the closed stores used automated checkout extensively, it’s a relevant point in the broader conversation about retail loss prevention strategies versus closure decisions.
Peeling back the layers on Target’s store closures reveals a story that goes beyond a simple cause-and-effect of rising theft leading to shutdowns. While retail crime and violence are serious issues demanding attention, the data and analysis suggest that factors like financial performance, strategic real estate decisions, and perhaps a desire to influence legislative outcomes may also be significant components of the company’s rationale. It serves as a reminder that corporate decisions, especially those impacting communities through store closures, often have multifaceted drivers beneath the stated reasons, inviting us all to look a little closer at the full picture.
Related posts:
A glimpse into retail theft
Target blamed theft and violence for 9 store closures. Crime is higher at locations it kept open nearby
Target’s Critics Call Out Chicanery: New Report Contradicts Official Reason Behind Closings
