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U.S. Retail Lobbyists Withdraw Crucial Assertion on Inventory Losses Linked to 'Organized Retail Crime'

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U.S. Retail Lobbyists Retract Key Claim on 'Organized Retail Crime' Impact on Inventory Losses

The main lobbying group for U.S. retailers has retracted its assertion that "organized retail crime" accounted for nearly half of all inventory losses in 2021. The National Retail Federation (NRF) made the retraction after discovering that incorrect data was used in its analysis. The NRF, in collaboration with private security firm K2 Integrity, published a report on organized retail crime in April, but has since removed the claim from the report. The research, which was edited in late November, had previously stated that "nearly half" of the $94.5 billion in inventory losses reported by retailers in a 2021 survey were attributable to organized retail crime.

Challenges in Quantifying Inventory Losses

The NRF's retraction highlights the ongoing difficulties in accurately quantifying the impact of crime on inventory losses, also known as "shrink." While the term "organized retail crime" is used to describe coordinated theft by groups of thieves, the exact extent of its contribution to overall shrink remains challenging to determine. Some law enforcement sources suggest that shoplifting outside major cities has decreased since the start of the Covid-19 pandemic, but retailers argue that shoplifting is often underreported, and official crime statistics do not fully capture the scope of the problem.

Differing Perspectives on Retail Crime

Major retailers such as Target, DICK's Sporting Goods, and Walgreens have cited rising crime as a significant drag on profitability. However, some have since revised their concerns. Walgreens' CEO, for instance, admitted in a January earnings call that the company may have exaggerated the impact of rising shoplifting in the previous year. Industry data on shrink and organized retail crime can be complex, with varying perspectives. Trevor Wagener, chief economist for the Computer & Communications Industry Association, notes that industry data often combines shrink statistics with those related to organized retail crime, leading to "noisy" results. He points out that extrapolations, such as the Retail Industry Leaders Association's estimate of nearly $70 billion in annual costs from organized crime, should be viewed with caution, as shrink issues can vary depending on the retailer category.

Conflicting Estimates and NRF Data

The Retail Industry Leaders Association (RILA) stands by its estimate of organized crime costs, relying on data from large retailers. However, NRF data from its annual Retail Security Survey suggests that the percentage of shrink attributed to external theft, including organized retail crime, has remained around 36% since 2015. These conflicting estimates further contribute to the challenge of accurately assessing the impact of organized retail crime on inventory losses. In conclusion, the retraction of the NRF's claim on the impact of organized retail crime highlights the complexities and challenges in quantifying the role of crime in inventory shrink. Varying perspectives, underreported incidents, and differing data interpretations make it difficult to determine the exact extent of organized retail crime's contribution to inventory losses.

Impact of Retracted Claim on 'Organized Retail Crime' on New Business Ventures

The retraction by the National Retail Federation (NRF) of its claim that "organized retail crime" accounted for nearly half of all inventory losses in 2021 has potential implications for new businesses in the retail sector.

Reevaluating Risk Assessment

New businesses, particularly in retail, often rely on industry data to assess risks and make strategic decisions. The NRF's retraction could prompt these businesses to reevaluate their risk assessments and strategies related to inventory management and security.

Impact on Profitability Projections

Major retailers have cited rising crime as a significant drag on profitability. The retraction of the NRF's claim may lead new businesses to reconsider their profitability projections and potential mitigation strategies.

Understanding the Complexity of Inventory Losses

The NRF's retraction underscores the complexity of quantifying inventory losses due to crime. New businesses must understand that inventory losses, or "shrink," can result from a variety of factors, not just organized retail crime.

Need for Reliable Data

The retraction also highlights the need for reliable data in the retail industry. Conflicting estimates and interpretations of data can make it challenging for new businesses to make informed decisions.

Implications for Business Strategy

In light of the NRF's retraction, new businesses may need to reassess their strategies for dealing with inventory losses. This could involve investing more in security measures, improving inventory management practices, or lobbying for stronger laws against organized retail crime. In summary, the NRF's retraction of its claim on the impact of organized retail crime could have significant implications for new businesses in the retail sector. These businesses will need to navigate the complexities of inventory losses and make informed decisions based on reliable data.
Story First Published at: https://www.cnbc.com/2023/12/07/us-retail-lobbyists-retract-key-claim-on-organized-retail-crime-accounting-for-inventory-losses.html
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