New Data Challenges Perceptions of Increasing Retail Theft
Recent data from the National Retail Security Survey conducted by the National Retail Federation (NRF) reveals that the impact of theft on retailers' bottom lines has remained relatively consistent over the years, despite widespread attention to retail theft incidents. While total retail shrink increased to over $112 billion in 2022 from $93.9 billion the previous year, losses from internal and external theft were largely in line with historical trends, making up 65% of total shrink.
Shifts in Types of Theft
External theft, including organized retail crime, remained the largest source of shrink in 2022 at 36.15%, slightly lower than 37% in 2021. Internal theft, involving goods stolen by employees, saw a slight increase to 28.85% from 28.5% in 2021. Process and control failures and errors accounted for 27.29% of shrink in 2022, up from 25.7% the previous year.
Shrink as a Percentage of Sales
Although retail shrink climbed in absolute dollars, when reported as a percentage of sales, the average annual shrink increased to 1.57% in 2022, up from 1.44% in 2021. These figures are largely consistent with past years, with average annual shrink at 1.62% before the pandemic in 2019 and as low as 1.33% in 2017.
Underreported Losses and Safety Concerns
The NRF survey highlighted that the actual dollar loss associated with shrink, particularly theft, is likely heavily underreported. Many retailers do not include e-commerce goods or supply chain losses in their shrink calculations. However, the industry's primary concern is not the amount of theft but the increased violence associated with it. Retailers, regardless of size or category, prioritize safety and are troubled by the rising incidents of violence.
Impact on Retailers and Countermeasures
The survey revealed that 67% of respondents reported an increase in violence associated with organized retail crime compared to the previous year. In response, 45% of retailers have reduced store hours, nearly 30% have adjusted store product selection, and 28% have closed specific locations due to crime. Major cities such as Los Angeles, San Francisco/Oakland, Houston, New York, and Seattle were identified as the most affected by retail crime.
Support for Legislative Action
An overwhelming majority of respondents, 93%, expressed support for federal organized retail crime legislation. The Inform Act, aimed at deterring the sale of stolen goods online, has already been passed by Congress, and lawmakers have introduced another bill calling for stricter penalties for theft offenses. The NRF supports these legislative efforts.
In conclusion, while retail theft continues to be a concern, the latest industry survey challenges the perception of increasing theft. The data highlights the need for accurate reporting of losses, addresses safety concerns, and emphasizes the importance of legislative action to combat organized retail crime.
Implications of Retail Theft Trends for New Businesses
The latest data from the National Retail Security Survey by the National Retail Federation (NRF) offers critical insights for new businesses in the retail sector. The survey reveals that while retail theft continues to attract attention, its impact on retailers' bottom lines has remained relatively consistent over the years.
Understanding Theft Trends
External theft, including organized retail crime, and internal theft, involving goods stolen by employees, accounted for 65% of total retail shrink in 2022. Interestingly, these figures align with historical trends, suggesting that businesses should focus on both external and internal theft prevention strategies.
Shrink as a Proportion of Sales
Despite an increase in absolute dollars, retail shrink as a percentage of sales has remained relatively stable over the years. This consistency indicates that while businesses should be mindful of shrink, it should not be the sole focus of their loss prevention strategies.
The Underreporting Issue and Safety Concerns
The NRF survey highlights that the actual dollar loss associated with shrink is likely heavily underreported. However, the industry's primary concern is the increased violence associated with theft. For new businesses, this underscores the importance of prioritizing safety measures to protect employees and customers.
Adapting to Retail Crime Trends
In response to increased violence associated with organized retail crime, many retailers have reduced store hours, adjusted product selection, or even closed specific locations. These measures indicate that new businesses must be prepared to adapt their operations in response to crime trends.
Support for Legislative Measures
The overwhelming support for federal organized retail crime legislation among survey respondents suggests that new businesses should also consider advocating for such measures. The Inform Act and other proposed bills could provide additional tools to combat organized retail crime.
In summary, while retail theft remains a concern, the latest industry survey challenges the perception of increasing theft. New businesses in the retail sector should consider these insights as they develop their loss prevention and safety strategies.