Cities like Philadelphia are still feeling the side effects of high inflation and retail theft, resulting in store closures and layoffs.
In April 2024, six Philadelphia Family Dollar stores closed. This was part of the closure of 1,000 stores nationwide by Dollar Tree Inc., which owns Dollar Tree and Family Dollar. The company said it would close about 600 stores in the first half of the year and an additional 370 stores over the next several years. The retailer has struggled with the effects of inflation on low-income shoppers’ wallets, as well as increased shoplifting that hurts their bottom line. Sixty-two employees were assumed to be affected by the closures of the Philadelphia Family Dollar stores.
Rising wages, transportation, and raw materials costs reportedly strain profit margins. With inflation still above pre-pandemic levels, retailers and shoppers alike are feeling the financial pressure. Discount businesses like Dollar Tree and Family Dollar rely on a low-price approach to draw budget-conscious clients, and they have to choose between raising their prices or closing stores to cut costs. When President Biden took office in January 2021, inflation was at 1.4%. Inflation peaked at 9.1% in June 2022 and only came below 3% this past July. Consumers are cutting back on discretionary spending to afford the necessities, which makes lower-cost stores more difficult to stay afloat.
According to the U.S. Chamber of Commerce, retail crime costs businesses in Pennsylvania over $7.7 billion in lost product costs, higher insurance, increased price of goods, and unrealized wages and also accounts for over $1.2 billion in lost tax revenue to the state and local governments. A U.S. Chamber blog post outlines the effects of retail crimes on communities, noting, “Retail crime creates higher prices for consumers, results in stores having to close their doors, and communities left without vital goods and services.”
In Forbes Advisor’s retail theft 2024 statistics, Pennsylvania is ranked #5 on its list of states most impacted by retail theft, accounting for 27% more retail crime compared to the national average. It accounted for the highest total value of stolen goods among all fifty states, averaging $430 per resident, making it the second worst state in terms of lost tax revenue per capita, accounting for $96 lost per resident. Pennsylvania was also ranked #11 on their list of business closures per state due to retail theft, costing businesses $595 per resident.
Dollar Tree, Inc. is not the only chain fleeing parts of Pennsylvania. Last year, Target announced they were abandoning a new store under construction in a Philadelphia neighborhood. While they didn’t provide a specific reason, Target spokesperson Jim Joice told the Philly Voice, “We routinely assess our current projects and have made the decision to no longer pursue a store in this location.” This came just one month after Target announced the closure of nine other stores in Oregon, Washington, California, and New York due to ongoing and increasing retail theft. They cited “fundamental challenges to operating these stores safely and successfully” even after they implemented more security measures.
