Retail Organization Amends Statement on Organized Retail Crime’s Impact on Inventory Losses

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The National Retail Federation, America’s foremost retail trade association, has amended a previously released report from April, retracting the assertion that organized retail crime contributes to nearly half of the total industry shrinkage. Industry shrinkage refers to the comprehensive loss of inventory, inclusive of theft.

This correction in the association’s report about organized retail crime, dated December 1, came after Retail Dive, a digital news platform focusing on retail trends, identified errors in the initial data.

The initial report was a collaborative effort between the trade group and K2, a firm specializing in financial crimes risk management. It inaccurately claimed that organized retail crime represented nearly half of the estimated $94.51 billion in total industry shrinkage.

In a recent interview with The Big Big News, David Johnston, the vice president of asset protection and retail operations for the national retail group, explained that the discrepancy originated from K2’s misinterpretation of U.S. Senate testimony in 2021. The testimony was given by Ben Dugan, then-president of the nonpartisan organization Coalition of Law Enforcement and Retail (CLEAR). Dugan had claimed that organized retail crime resulted in $45 billion in annual retail losses, referencing his coalition.

The mistake occurred when the K2 analyst wrongly connected this figure from CLEAR with the results of NRF’s 2022 security survey. Johnston disclosed his uncertainty about the origin of CLEAR’s $45 billion figure, noting that a 2016 survey by the retail group reported a total shrinkage loss of $45 billion.

The updated report has removed any dollar estimates of the impact of organized retail crime and all references to CLEAR.

Johnston admitted the error, stating, “It was an inaccurate inference. We missed it.”

The exact financial impact of organized retail crime on retailers remains uncertain, as does the question of whether the problem has escalated significantly. However, the issue has gained prominence recently due to notable instances of smash-and-grab thefts and flash mob robberies, attracting national media coverage. Recently, several retailers, such as Dick’s Sporting Goods and Ulta Beauty, have pointed to increasing theft as a contributing factor to declining profits.

Target, in late September, announced the closure of nine stores across four states, including locations in New York City and the San Francisco Bay Area, attributing the decision to theft and organized retail crime posing risks to employees and customers. These stores were shuttered at the end of October.

Contrasting this narrative, a November report by the nonpartisan Council on Criminal Justice, studying 24 major U.S. cities, revealed a nuanced picture of shoplifting trends. Based on police data up to mid-2023, the report showed a 16% increase in shoplifting incidents compared to the first half of 2019. However, excluding New York City, the incidents actually decreased by 7%.

Ernesto Lopez from the Council on Criminal Justice, a co-author of this report, stressed the importance of context in understanding shoplifting trends, given that previous efforts relied on data from single jurisdictions or specific retailers. He emphasized the need for more comprehensive data.

“In the current scenario, we lack a thorough understanding of the scope and evolution of the shoplifting issue,” Lopez commented to The Big Big News, responding to the NRF’s revised report. He highlighted the uncertainty regarding the frequency of theft incident reporting by retailers to police and the impact of anti-theft measures.

“Without complete information, any depiction of shoplifting remains incomplete,” he added.

The National Retail Federation, while acknowledging the challenge in collating and analyzing consistent data on theft incidents nationwide, stands by the belief that organized retail crime significantly affects retailers and communities.

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Frequently Asked Questions (FAQs) about Organized Retail Crime

More about Organized Retail Crime

• National Retail Federation
• Retail Dive
• K2 Financial Crimes Risk Management
• Coalition of Law Enforcement and Retail (CLEAR)
• Dick’s Sporting Goods
• Ulta Beauty
• Council on Criminal Justice Shoplifting Report
• Target Store Closures
• Anne D’Innocenzio Twitter Profile