{"id":84248,"date":"2023-11-14T03:04:00","date_gmt":"2023-11-14T08:04:00","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/retail-shrink-is-about-much-more-than-theft-analysts-say\/"},"modified":"2023-11-14T03:04:02","modified_gmt":"2023-11-14T08:04:02","slug":"retail-shrink-is-about-much-more-than-theft-analysts-say","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=84248","title":{"rendered":"Retail \u2018shrink\u2019 is about much more than theft, analysts say"},"content":{"rendered":"
\n

As retail earnings kick off this week, investors will be watching closely to see whether organized retail crime is still casting a shadow over the sector.<\/p>\n

Crime has been a hot topic in recent earnings seasons, cited by major retailers such as Target Corp.
\n TGT,
\n -0.95%<\/bg-quote>.<\/span>
\n In August, when Target reported second-quarter results, CEO Brian Cornell reiterated his\u00a0previous comments\u00a0about inventory \u201cshrink,\u201d saying that the company is\u00a0facing\u00a0an \u201cunacceptable amount\u201d of retail theft and organized retail crime.<\/p>\n

\n

But analysts say there is much more to retail-industry shrink than just theft. \u201cOver the course of 2022 and 2023, retailers have increasingly highlighted rising shrink concerns and related headwinds on margin,\u201d William Blair analyst Dylan Carden said in a recent note. \u201cWe believe context is important, namely that much of the increase in 2022 was related to shrink normalization coming out of the pandemic, when temporary closures and subsequent in-store shopping restrictions led to a more dramatic decrease in shrink.\u201d<\/p>\n

Related: <\/strong>Retail earnings begin this week. \u2018It\u2019s getting worse,\u2019 an analyst says.<\/p>\n

The National Retail Federation\u2019s 2023 Retail Security Survey, which was released in September,\u00a0found that the average shrink rate in fiscal year 2022 increased to 1.6%, up from 1.4% in fiscal year 2021.\u00a0When taken as a percentage of total retail sales in 2022, that shrink represents $112.1 billion in losses, according to the NRF.<\/p>\n

William Blair analyst Carden says elevated shrink is expected in 2023, coinciding with growing organized retail crime. However, he feels there\u2019s a disconnect between the expected increase in shrink and the level of attention the topic has drawn. \u201cWhile theft is likely elevated, companies are also likely using the opportunity to draw attention away from margin headwinds in the form of higher promotions and weaker inventory management in recent quarters,\u201d Carden added. \u201cWe also believe some more recent permanent store closures enacted under the cover of shrink relate to underperformance of these locations.\u201d<\/p>\n

Target\u2019s recent announcement that it will close nine stores across four states, for example, has been scrutinized in light of local crime and foot-traffic data.<\/p>\n

Related:<\/strong> As Target prepares to close stores, crime data and foot traffic are in the spotlight<\/p>\n

Set against this backdrop, analysts say there are multiple pieces that make up the puzzle of retail shrink. \u201cI think we need to be clear about what shrinkage is. If shrinkage has increased, there are a lot of reasons, not just theft,\u201d Melodie van der Baan, CEO of Max Retail, which helps retailers and brands sell excess inventory, told MarketWatch. \u201cOne of the biggest reasons is stock that cannot be restocked.\u201d<\/p>\n

Specifically, van der Baan pointed to returned merchandise that is damaged or that can\u2019t be resold, such as undergarments or beauty items. \u201cI question the amount of unsellable returns and how much that accounts for the amount of shrinkage, not just theft,\u201d she added.<\/p>\n

Consumer behavior has also shifted since the COVID-19 pandemic hit, according to the van der Baan. \u201cWe have seen the return business boom, that\u2019s undeniable,\u201d she said. \u201cPeople are more \u2018instant gratification.\u2019\u201d<\/p>\n

Related: <\/strong>Retailers talk a lot about rising theft. But a retail-industry report finds a key metric hasn\u2019t increased much.<\/p>\n

A report released in December by the NRF and Appriss Retail found that for every $1 billion in sales, the average retailer incurs $165 million in merchandise returns. For every $100 in returned merchandise accepted, retailers lose $10.40 to return fraud, according to the report.<\/p>\n

The report also found that the average rate of return remained flat at 16.5% in 2022, compared with 16.6% in 2021.\u00a0<\/p>\n

This is a busy week for major retail earnings. Home-improvement giant Home Depot Inc.
\n HD,
\n -1.21%<\/bg-quote>
\n reports third-quarter results before market open on Tuesday and Target reports third-quarter results before market open Wednesday. Walmart Inc.
\n WMT,
\n +0.90%<\/bg-quote>
\n reports before market open on Thursday and BJ\u2019s Wholesale Club Holdings Inc.
\n BJ,
\n +0.83%<\/bg-quote>
\n reports third-quarter results before market open Friday.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

As retail earnings kick off this week, investors will be watching closely to see whether organized retail crime is still casting a shadow over the sector. Crime has been a hot topic in recent earnings seasons, cited by major retailers such as Target Corp. TGT, -0.95%. In August, when Target reported second-quarter results, CEO Brian […]<\/p>\n","protected":false},"author":1,"featured_media":84249,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-84248","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nRetail \u2018shrink\u2019 is about much more than theft, analysts say | iFintechWorld<\/title>\n<meta name=\"description\" content=\"As retail earnings kick off this week, investors will be watching closely to see whether organized retail crime is still casting a shadow over the sector.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=84248\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Retail \u2018shrink\u2019 is about much more than theft, analysts say | iFintechWorld\" \/>\n<meta property=\"og:description\" content=\"As retail earnings kick off this week, investors will be watching closely to see whether organized retail crime is still casting a shadow over the sector.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/ifintechworld.com\/?p=84248\" \/>\n<meta property=\"og:site_name\" content=\"iFintechWorld\" \/>\n<meta property=\"article:published_time\" content=\"2023-11-14T08:04:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-11-14T08:04:02+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/11\/1699949041_social.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"640\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/ifintechworld.com\/?p=84248#article\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=84248\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\"},\"headline\":\"Retail \u2018shrink\u2019 is about much more than theft, analysts say\",\"datePublished\":\"2023-11-14T08:04:00+00:00\",\"dateModified\":\"2023-11-14T08:04:02+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=84248\"},\"wordCount\":653,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"keywords\":[\"Featured\"],\"articleSection\":[\"Investing\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/ifintechworld.com\/?p=84248#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/ifintechworld.com\/?p=84248\",\"url\":\"https:\/\/ifintechworld.com\/?p=84248\",\"name\":\"Retail \u2018shrink\u2019 is about much more than theft, analysts say | iFintechWorld\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/#website\"},\"datePublished\":\"2023-11-14T08:04:00+00:00\",\"dateModified\":\"2023-11-14T08:04:02+00:00\",\"description\":\"As retail earnings kick off this week, investors will be watching closely to see whether organized retail crime is still casting a shadow over the sector.\",\"breadcrumb\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=84248#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/ifintechworld.com\/?p=84248\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/ifintechworld.com\/?p=84248#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/ifintechworld.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Retail \u2018shrink\u2019 is about much more than theft, analysts say\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/ifintechworld.com\/#website\",\"url\":\"https:\/\/ifintechworld.com\/\",\"name\":\"Repay Down\",\"description\":\"Latest Personal Finance News, Tips and Updates\",\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/ifintechworld.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/ifintechworld.com\/#organization\",\"name\":\"Repay Down\",\"url\":\"https:\/\/ifintechworld.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"width\":558,\"height\":90,\"caption\":\"Repay Down\"},\"image\":{\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/ifintechworld.com\"],\"url\":\"https:\/\/ifintechworld.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Retail \u2018shrink\u2019 is about much more than theft, analysts say | iFintechWorld","description":"As retail earnings kick off this week, investors will be watching closely to see whether organized retail crime is still casting a shadow over the sector.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/ifintechworld.com\/?p=84248","og_locale":"en_US","og_type":"article","og_title":"Retail \u2018shrink\u2019 is about much more than theft, analysts say | iFintechWorld","og_description":"As retail earnings kick off this week, investors will be watching closely to see whether organized retail crime is still casting a shadow over the sector.","og_url":"https:\/\/ifintechworld.com\/?p=84248","og_site_name":"iFintechWorld","article_published_time":"2023-11-14T08:04:00+00:00","article_modified_time":"2023-11-14T08:04:02+00:00","og_image":[{"width":1280,"height":640,"url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/11\/1699949041_social.jpeg","type":"image\/jpeg"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/ifintechworld.com\/?p=84248#article","isPartOf":{"@id":"https:\/\/ifintechworld.com\/?p=84248"},"author":{"name":"News Room","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61"},"headline":"Retail \u2018shrink\u2019 is about much more than theft, analysts say","datePublished":"2023-11-14T08:04:00+00:00","dateModified":"2023-11-14T08:04:02+00:00","mainEntityOfPage":{"@id":"https:\/\/ifintechworld.com\/?p=84248"},"wordCount":653,"commentCount":0,"publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"keywords":["Featured"],"articleSection":["Investing"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/ifintechworld.com\/?p=84248#respond"]}]},{"@type":"WebPage","@id":"https:\/\/ifintechworld.com\/?p=84248","url":"https:\/\/ifintechworld.com\/?p=84248","name":"Retail \u2018shrink\u2019 is about much more than theft, analysts say | iFintechWorld","isPartOf":{"@id":"https:\/\/ifintechworld.com\/#website"},"datePublished":"2023-11-14T08:04:00+00:00","dateModified":"2023-11-14T08:04:02+00:00","description":"As retail earnings kick off this week, investors will be watching closely to see whether organized retail crime is still casting a shadow over the sector.","breadcrumb":{"@id":"https:\/\/ifintechworld.com\/?p=84248#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/ifintechworld.com\/?p=84248"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/ifintechworld.com\/?p=84248#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/ifintechworld.com\/"},{"@type":"ListItem","position":2,"name":"Retail \u2018shrink\u2019 is about much more than theft, analysts say"}]},{"@type":"WebSite","@id":"https:\/\/ifintechworld.com\/#website","url":"https:\/\/ifintechworld.com\/","name":"Repay Down","description":"Latest Personal Finance News, Tips and Updates","publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ifintechworld.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/ifintechworld.com\/#organization","name":"Repay Down","url":"https:\/\/ifintechworld.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","width":558,"height":90,"caption":"Repay Down"},"image":{"@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","caption":"News Room"},"sameAs":["https:\/\/ifintechworld.com"],"url":"https:\/\/ifintechworld.com\/?author=1"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/84248","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=84248"}],"version-history":[{"count":1,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/84248\/revisions"}],"predecessor-version":[{"id":84250,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/84248\/revisions\/84250"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/media\/84249"}],"wp:attachment":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=84248"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=84248"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=84248"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}