[WalterBright]

From the article:

"Rite Aid, a pharmacy, closed a branch in Hell’s Kitchen in February after losing $200,000 worth of stuff last winter. And last week Target, a big retailer, reported that a rise in “shrink” (to use the industry jargon) had reduced its gross profit margin by $400m so far this year. The National Retail Federation says inventory loss, largely driven by theft, cost retailers a record $95bn last year."

It seems that $300k is several orders of magnitude off.

The harm to the public is when the stores find it unprofitable to exist in certain neighborhoods, which makes the neighborhoods even worse off. If the stores don't close, then prices have to rise to pay for the shrinkage, which the public has to pay for.

[pbhjpbhj]

Is it unprofitable or just not profitable enough for the capitalists who could get more return elsewhere?

The cause in the increase is possibly an increase in poverty, or increase in wealth disparity?

[WalterBright]

Would you invest in something that returns 1% when there are 2% returns elsewhere? That is called the "opportunity cost", and a business is misallocating capital if the expected return is less than the opportunity cost.

> The cause in the increase is possibly an increase in poverty, or increase in wealth disparity?

I don't understand your question. Businesses have to have a return on their investment, or they go out of business. Shrinkage is a cost, so the price on the goods has to be raised to compensate.

    Profit = Revenue - Cost

[midasuni]

The price will be increased until people stop buying (either because they do without, go elsewhere, or shoplift)

The cost of shrinkage doesn’t factor into the price a business can charge. You don’t decide “I will buy X for $1 and sell it for $3”, you go “I can sell X for $3, where’s the cheapest I can buy it and does it make sense”

Now if you have a competitor next door selling X for $2.50 you will struggle to sell for $3, even if your rent or your supplier is higher

[WalterBright]

If you can't raise prices, you go out of business.

> if you have a competitor next door selling X for $2.50 you will struggle to sell for $3

Right, but your competitor next door is also suffering from shrinkage.

There's no way that shrinkage does not impact prices. Having the government run it won't help, either, as even if the government doesn't raise prices, the money will come out of your pocket anyway as taxes or inflation.

[generj]

Just as an addition, it’s worth noting most store theft comes from employees not the public.

It’s expensive to minimize opportunities for the public to steal. Basic speed bumps preventing employees (who can steal more extensively) are less expensive and tend to be the focus.

[WalterBright]

> it’s worth noting most store theft comes from employees not the public

Employee theft is always a problem, too, but whether it is worse than shrinkage or not is kind of irrelevant - it's still going to cost the business money which will mean that they'll raise prices or go under.

Employee theft can and does cause businesses to fail.