Target has recently announced that it will be closing 9 of its stores in 4 states due to theft and organized retail crime. Among the stores that will be closed are one in New York City, two in Seattle, three in Portland, and three in San Francisco. The stores will be closing in October 21, 2023. Target operates 2000 stores. Closing nine doesn't seem to be a lot. However, in recent years many brick and mortar stores have been struggling to compete with online shopping. While I don't have any reason not to believe the reasons Target has provided for closing these stores, I believe revenue and profitability of various locations also play a role. In this post I would like to explore the current and future challenges physical retail stores have been and will be facing in coming years. I don't have the answers. All I have are questions.
It does sound alarming when a major retailer with decades of experience is not able to come up with a solution for ages old problem. Shoplifting, theft, and even organized schemes to steal are not new. This is not a new problem. I am sure Target had systems and measures in place to address them. But at the same time, I can see how stores can write off theft as cost of doing business. Now when this cost exceeds the profits, it may be a good idea to close the stores if there are no solutions are available. What I mean is when things were great and retail was super profitable, perhaps the losses due to theft weren't significant enough to bother. Operating stores would still be profitable. Now when chain of stores, or individual locations start performing poorly in profits, any losses however small they may seem will be require attention. I am not sure if this was the case with these stores. My questions is why now? What has changed?
Perhaps organized retail crime got more sophisticated and security systems in place no longer were preventing these crimes and losses. Perhaps crime rates went up in the locations significantly. Or maybe even legal or political changes in certain areas may have had some influence. I remember a while ago reading an article that there was some new law in California made shoplifting not a crime. Something that was a felony before now was just considered a misdemeanor or something like that. In other words the punishment for the crime was lowered or completely removed that it may increased shoplifting. I haven't research on this topic much. But I can new laws or political decisions in various jurisdictions may have made getting away with shoplifting, or retail theft easier. The decision of closing these stores could be political one as well. Because I continue to wonder why such drastic measures as closing stores. Surely, there should be solutions for the issues Target stores are facing if it has to do with theft or crime. In other words, Target might be sending signals to local politicians or lawmakers that they need to act or Target will shut down. I don't know I am just speculating.
Closing only nine stores in specific locations doesn't sound like Target actually has business troubles, but perhaps this problem is just isolation to these certain locations at this time. Just like any other physical stores Target has been facing a massive competition with the shift to online shopping. Those who have adapted, that includes Target as well, have done ok so far. Because they too were able to show competence in online marketplace, and have been improving their online presence. Online shopping will continue to grow is it not yet decided if brick and mortar stores will still be around in years to come. I would like to think they will. There is something special about physical stores. However, even if physical stores survive they will face other challenges like automating the entire process. Amazon was among the leaders in developing stores where there is no need for cashiers. The technology is already available, and there are multiple different kinds. The one I recently saw as that utilized some kind of hand scanning feature when customers enter the stores and any item the grab would automatically be added to their cart list and automatically paid when they leave the store. I am sure this will continue getting better and more and more stores will be utilizes such technologies.
Now question is, how would automated stores deal with theft and organized retail crime? First, I believe there are systems and technology already available for crime detection and prevention. And I am not just talking about cameras. Moreover, as AI is being utilized in different industries, I am sure its in works for retail spaces too. I am not sure if all of the technology is good or bad. But I am certain there is plenty of research and development funds and resources are being dedicated for it. Automation and AI in stores will definitely be tried.
The entire retail business, structure, and system will probably have to be reinvented once again. While security and safety of workers, customers, and neighborhood is super important, the entire demand and how we utilize various businesses and technologies makes one wonder how everything should be reimagined once again. To make physical stores interesting again, retailers will have to consider new creative ways to attract customers, not just for sales. Retail stores would have to offer much more than products they sell. Perhaps some kind of experience, education, entertainment or quality time. This new systems would have to consider how to make deliveries efficient without relying on shipping companies and waiting for them to innovate the ways of their service. Of course this would also have to include sophisticated online presence and tools for customers to choose from.
In fact in their announcement Target does emphasize their focus and investment in cyber security as well. They are not only considering the safety for workers and customers in their physical stores but also for their online services as well. So many companies have lost customer information due to various hacks and companies lack of cyber security measures.
While these stores are closing, it doesn't look like Target would be laying out employees in these stores, but rather will offer them to continue their employment in other stores that will still be open in those locations. That does suggest that Target indeed is not having financial difficulties, and this is not the start of some chain closures in more locations. Let me know your thoughts in the comments.