The circle of life. Stores fail for complex reasons → retailer quietly posts accurate analysis of its own mistakes → retailer loudly posts press release blaming shoplifters and gangs → media likes …
Insurance is a business, they don’t just pay out claims and take the loss themselves so that Target can ignore losses.
When target gets insurance for theft, it means they pay the average monthly losses (+ fees) and don’t have to deal with the ups and downs of theft happening unpredictably.
In other words, if theft actually went up a lot, Target would still be on the hook for paying for it, but it would be through higher (stable) premiums.
The way you’re describing it, shoplifting gets the theif a free item, and no one ends up paying for it. That’s a very naive view of how money works.
Don’t get me wrong, I’m all for sticking it to big corporations, but we could just be honest about what we’re saying: I don’t care if shoplifting costs retailers money.
You’re 100% right on the second point, though, they anticipate some amount of shrinkage when setting prices.
they’re not paying premiums. there is no “insurance policy” to pay premiums. when a company self insures itself, what that means, is, they keep some capital on hand (or readily availible,) so that they can weather a problem.
because they price the loss into the merchandise they sell, if they expect x% of the pallet to be stolen, and the reality is a bit higher, they dip into that fund to buy the next pallet, which, they then price at y% loss, and a bit more to compensate for the extra they lost on the first pallet. Maybe this time it was a bit low. so they go back to x% on the third.
the costs are passed directly onto consumers with no insurance company meddling. because that would just be inefficient. they might have a clause in a policy against mass-loss if, for example, the entire store gets looted in a mass-theft or if the store somehow goes up in smoke or hit with a hurricane. but as a matter of normal operations, they’re not claiming insurance on every bit of lost product regardless the reason.
it’s a bit more insidious this way. The insurance company would demand some pretty common sense resolutions, like putting valuable things (PS5’s, laptops, Ipads, cell phones, etc) In lockup and not on the sales floor. Sure, they could pass the cost of these changes on to the customers, but, like, the jewelry counter and those glass cabinets they keep things in… smash and grab central.
They’re all insured for these kinds of losses anyway (I used to work in big box retail operations).
Insurance is a business, they don’t just pay out claims and take the loss themselves so that Target can ignore losses.
When target gets insurance for theft, it means they pay the average monthly losses (+ fees) and don’t have to deal with the ups and downs of theft happening unpredictably.
In other words, if theft actually went up a lot, Target would still be on the hook for paying for it, but it would be through higher (stable) premiums.
The way you’re describing it, shoplifting gets the theif a free item, and no one ends up paying for it. That’s a very naive view of how money works.
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And that’s a totally simplistic view of what I said. Overall, big box does well to keep theft down as to avoid paying. It’s all a big game.
“They’re all insured for these kinds of losses anyway” is a simple straightforward statement.
Insurance doesn’t mean they are protected from theft. If they actually have too much theft, closing a store can make sense, regardless of insurance.
Insurance isn’t going to cost less than what they’re losing. It just smooths out the losses and avoids any surprises.
They’re self insured for this… and it’s priced into the products they sell.
What do you suppose “self insured” means?
Don’t get me wrong, I’m all for sticking it to big corporations, but we could just be honest about what we’re saying: I don’t care if shoplifting costs retailers money.
You’re 100% right on the second point, though, they anticipate some amount of shrinkage when setting prices.
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they’re not paying premiums. there is no “insurance policy” to pay premiums. when a company self insures itself, what that means, is, they keep some capital on hand (or readily availible,) so that they can weather a problem.
because they price the loss into the merchandise they sell, if they expect x% of the pallet to be stolen, and the reality is a bit higher, they dip into that fund to buy the next pallet, which, they then price at y% loss, and a bit more to compensate for the extra they lost on the first pallet. Maybe this time it was a bit low. so they go back to x% on the third.
the costs are passed directly onto consumers with no insurance company meddling. because that would just be inefficient. they might have a clause in a policy against mass-loss if, for example, the entire store gets looted in a mass-theft or if the store somehow goes up in smoke or hit with a hurricane. but as a matter of normal operations, they’re not claiming insurance on every bit of lost product regardless the reason.
deleted by creator
it’s a bit more insidious this way. The insurance company would demand some pretty common sense resolutions, like putting valuable things (PS5’s, laptops, Ipads, cell phones, etc) In lockup and not on the sales floor. Sure, they could pass the cost of these changes on to the customers, but, like, the jewelry counter and those glass cabinets they keep things in… smash and grab central.
deleted by creator