As Target prepares to close theft-ridden stores, crime data and foot-traffic are in the spotlight

By James Rogers

Target recently announced the closure of nine stores in New York; Seattle; the San Francisco and Oakland area; and Portland, Ore., citing employee and guest safety

Target Corp.'s recent announcement that it will close nine stores across four states marked the latest chapter in the retail industry's ongoing struggle against theft and organized retail crime.

Last month Target (TGT) announced the closure of nine stores in New York; Seattle; the San Francisco and Oakland area; and Portland, Ore., citing the impact of theft and the importance of employee and guest safety. The store closures will be effective Oct. 21.

The news garnered plenty of attention, although Target has not revealed data about specific incidents at the stores. Nonetheless, researchers have sought to fill in these gaps.

Related: Target to close 9 stores across 4 states, citing theft

Citing publicly available crime data, Popular Information reports that stores being closed in New York, San Francisco and Seattle actually have lower levels of theft than nearby stores that have remained open. Data suggest that factors other than crime are driving Target's decision to close stores in New York, San Francisco, and Seattle, according to Popular Information. While the issue of "shrink," has been cited by multiple retailers in recent months, the website added that companies may be overemphasizing crime to deflect from internal issues such as staffing levels.

Target has not yet responded to a request for comment on this story.

But foot traffic trends may provide some insight into Target's decision to close the stores. Foot traffic to most of the Target locations earmarked for closure has been declining, according to the location-intelligence company Gravy Analytics. During the second quarter of 2023, foot traffic to San Francisco Target locations fell 23% compared with the prior year's quarter, Gravy Analytics said, while New York City locations fell 15% year over year and Seattle's were down 6%. Foot traffic to Portland locations, however, surged 43% over the same period.

Read more: Retailers talk a lot about rising theft. But a retail industry report finds a key metric for it hasn't increased that much.

"Target's decision to close stores in cities like San Francisco, New York City and Seattle, where foot traffic has declined and theft rates are notably high, aligns with a strategic move to mitigate financial losses," Gravy's chief marketing officer, Jolene Wiggins, said in a statement. "However, the closure of stores in a city like Portland, where customer visits have recently surged, might seem puzzling at first glance."

But Wiggins pointed to the broader challenges Target is facing. "Even with increased foot traffic, if these stores face challenges in generating sufficient profits due to rising theft and the accompanying security costs, Target's decision to close stores in Portland becomes a sensible business move," she added.

Speaking on the conference call to discuss Target's second-quarter results in August, Target CEO Brian Cornell said the company was facing an "unacceptable amount" of retail theft and organized retail crime. Cornell also highlighted safety threats Target employees are facing, saying that during the first five months of 2023, Target stores saw a 120% increase in theft involving violence or threats of violence.

Retail crime accounted for more than $112 billion in industry losses in 2022, up from $93.9 billion in 2021, according to a recent report from the National Retail Federation.

Related: Target sees more foot traffic despite anti-LGBTQ+ backlash, research finds

Target's stock is up 1.7% Thursday, outpacing the S&P 500 index's SPX gain of 0.2%.

-James Rogers

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10-12-23 1334ET

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