Nordstrom says theft in its stores is at historic high

Department store group Nordstrom’s sales have taken a tumble in Q2 with shoplifting causing a dent in its profits.

The US-based retailer said sales fell 8.3 percent, however a rise in crime has been instrumental in mounting these losses, which are a ‘historic high’, CEO Erik Nordstrom said in an earnings call with analysts.

Nordstrom is not alone, however, in battling increasing theft in its stores. According to Bloomberg Dick’s Sporting Goods missed its revenue estimates due to shrinkage caused by theft. Ulta Beauty also said its margins have been affected due to theft.

Retailers use a variety of strategies and measures to deal with shrinkage, which refers to the loss of inventory due to factors like theft, shoplifting, employee theft, administrative errors, and supplier fraud. Shrinkage can have a significant impact on a retailer’s profitability, with most having strategies in place to minimize their effect.

One method is the use of inventory control systems that track merchandise movement in real-time. This helps identify discrepancies between actual inventory and recorded sales, which could indicate theft.

Another strategy is auditing and reconciliation where regular inventory audits are conducted to identify discrepancies and potential shrinkage. This can help retailers pinpoint where and how losses are occurring.

Most retailers will account for losses in their annual forecast.