Low cost retail chain Greenback Tree is taking a “very defensive strategy” to fight widespread theft in its shops, which the corporate mentioned in an earnings name on Thursday partially contributed to a tough quarter.
The retailer’s final earnings report, which was launched on Thursday, confirmed an total enhance in gross sales, however acknowledged that it’s “not immune” to the continued “affect of elevated shrink.”
Since 2022, Greenback Tree has been going through the problem of “shrink“ (stock losses from theft, injury, and different elements) in its shops. Greenback Tree theft arrests have occurred in states resembling Florida, New York, and Pennsylvania.
The corporate, which owns and operates Greenback Tree, Enterprise, and Household Greenback shops, noticed a rise in same-store gross sales throughout its manufacturers, however a 0.5% decline in its gross revenue margin for the second quarter of 2023. On the decision, CEO Richard Dreiling and CFO Jeffrey Davis partially linked the drop to elevated ranges of shrink. Regardless of efforts to deal with the continued subject, the shrink downside has worsened far past what it “had anticipated,” Davis mentioned.
Now, the retail big is taking a extra aggressive strategy with measures starting from elevated gadgets being locked behind cabinets to discontinuing repeatedly offered merchandise at sure shops altogether.
“We are actually taking a really defensive strategy to shrink,” Dreiling mentioned on the decision. “We have now a number of new shrink codecs that we’ll introduce within the again half of the yr, and it goes every part from shifting sure SKUs to behind the examine stand. It has to do with some circumstances being locked up. And even to the purpose the place we’ve some shops that may’t preserve a sure SKU on the shelf simply discontinuing the merchandise. So we’ve numerous issues within the works.”
Greenback Tree is not the one retail big combatting elevated ranges of theft. In line with the Nationwide Retail Federation’s 2022 report on group retail crime (ORT), of 63 retailers — which function 1000’s of shops throughout the U.S. — 70% said that the prevalence of shrink has elevated over the previous 5 years. Moreover, 89.7% of respondents mentioned that their loss prevention departments are taking actionable measures to fight the phenomenon, making it a part of their “objectives, targets or efficiency measures.”
When accounting for the monetary setbacks, the report discovered that the 1.4% enhance in shrink accounted for $94.5 billion in losses in 2021.
Associated: Walmart CEO Doug McMillon Says Organized Retail Theft May Result in Shops Closing