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Costco Isn't Facing Devastating Surges in Theft Like Target and Walmart — and the Reason Is Very Simple The retailer's CFO revealed its strategy during a fourth-quarter-earnings call.

By Amanda Breen Edited by Jessica Thomas

Key Takeaways

  • Major retailers are battling surging inventory theft — but not Costco.
  • CFO Richard Galanti says the retailer's limited self-checkout is to thank.
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Shrinkage, the loss of inventory not due to sales, is plaguing some of the biggest names in U.S. retail — but not one of them.

Costco's remained relatively unscathed by increasing theft, and its chief financial officer Richard Galanti offered a simple explanation during the company's fourth-quarter earnings call: limiting self-checkout, TheStreet reported.

Related: Walmart CEO Says Retail Theft Could Lead to Store Closures

Self-checkout is only available at select locations, according to the company's site. That's in stark contrast to some retailers grappling with theft increases like Walmart, which offers the option at "a number of locations" and even piloted exclusively self-checkout stores, CNN Business reported.

Inventory shrink spiked 53% to $94.5 billion between 2019 and 2021, according to the National Retail Federation's annual survey. And a report from the UK's University of Leicester found that theft comprises almost 4% of inventory for retailers with self-checkout versus 1.5% for those without.

Walmart, Home Depot and Target executives have voiced concerns about the issue in recent earnings calls, with Target CEO Brian Cornell saying it's "unacceptable" and unsustainable, Yahoo Finance reported. The retailer is closing nine stores across four states due to ongoing crime.

Related: Dick's Sporting Goods Facing 'Serious' Retail Crime Problem

"Over the past year, [shrink] has increased by less than one basis point [0.01 percentage point] more," Galanti said on the call. "So, no, thankfully, not a big issue for us."

Amanda Breen

Entrepreneur Staff

Senior Features Writer

Amanda Breen is a senior features writer at Entrepreneur.com. She is a graduate of Barnard College and received an MFA in writing at Columbia University, where she was a news fellow for the School of the Arts.

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