Latest / Markets with Megan: A Quick Financial Markets Update / 039: Breaking Down the $100 Billion Retail Shrinkage Dilemma 08-24-23

Transcript

039: Breaking Down the $100 Billion Retail Shrinkage Dilemma 08-24-23 · Markets with Megan: A Quick Financial Markets Update

• 0:04
  Megan Horneman: Hello, this is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors, coming in today with Markets.
• 0:10
  Megan Horneman: With Megan, and we are going to talk about some of the common themes we've been hearing, or one particular common theme we've been hearing out of retailers, as they're the ones that wind up the end of our second quarter, 2023 earnings season, and what you're going to see a lot of headlines about is retail shrink, or what they're calling shrinkage, and this is basically an unaccounted for loss of inventory.
• 0:31
  Megan Horneman: And, most predominantly, what is being talked about now is theft and how these retailers are dealing with the amount of theft of inventory in their stores.
• 0:41
  Megan Horneman: The most recent National Retail Federation survey showed that theft now is accounting for about $100 billion worth of losses for retailers in a calendar year, and the problem with this going forward is obviously there's a human element here in law and order, but from a company perspective, keep in mind that retailers are already operating on a very low margin.
• 1:04
  Megan Horneman: So, in order to tackle this unless there is something from the law side of this that changes in order to tackle this, they're going to have to either put in more security, hire more people from security they're going to have to start locking up their goods or, unfortunately, you're going to see more retailers shutting storefronts.
• 1:20
  Megan Horneman: That means less employees, that means problems with the labor market, and then the other issue that could arise from this is that, in order to accommodate or factor in these types of losses on an annual basis is you'll see companies raise prices.
• 1:34
  Megan Horneman: None of this is necessarily good news for the retailers.
• 1:37
  Megan Horneman: It can have an adverse effect on consumers as well.
• 1:40
  Megan Horneman: We'll keep our eye on this and see if there's anything that we get from the administration or any other government officials on how to tackle this, but at this point we're just looking at some really disappointing developments there from the retailers in regards to theft.
• 1:55
  Megan Horneman: If you have any questions or comments, please feel free to reach out to a podcast at verdence dot com.
• 2:00
  Megan Horneman: Thank you,