Costco is winning the war against retail shrink, boasts it's 'not a big issue' as retailers such as Target shutter stores across the country — here's why

“Thankfully, it's not a big issue for us,” chief financial officer Richard Galanti told investors during a company’s earnings call in September, according to the Daily Mail.

Here’s how one of the largest retailers in the country is circumventing one of the industry’s biggest threats to its collective bottom line

Spike in retail theft

A spike in reports of shoplifting have been seen across the country in recent months. Retail corporations have said that merchandise losses related to theft, including organized retail crime, have ticked up recently.

The issue has pushed some retailers to shutter stores. Target (NYSE:TRGT), for example, recently said it would shutter nine locations across the U.S. because of rising theft and crime.

Altogether, theft accounts for 65% of retail shrink — 36% due to external theft and 29% due to internal (employee) theft — according to the NRF’s research.

Costco's robust defenses

Costco has managed to keep a lid on its level of shrink.

Galanti told the Daily Mail after the earnings call that the company’s shrinkage rate was between “0.1% and 0.2%,” according to its data at the time. That’s significantly lower than the nationwide average of 1.6%, as reported by the NRF.

Among the reasons Galanti cited for Costco’s relatively low shrinkage is the layout of its stores. Because Costco stores are structured like warehouses, with only a single point of entry or exit, they’re less vulnerable to thieves.