Retailers are seeing ‘unprecedented’ levels of theft — losses top $112B in 2022

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Retailers are losing billions in inventory due to unprecedented levels of organized theft, forcing them to change the way they do business, move, or close for good.

Organized retail theft jumped from $93.9 billion in 2021 to $112.1 billion in 2022, according to a new survey released by the National Retail Federation.

“Retailers are seeing unprecedented levels of theft coupled with rampant crime in their stores, and the situation is only becoming more dire,” David Johnston, who is NRF’s vice president for asset protection and retail operations, commented in a statement sent out on Tuesday.

“Far beyond the financial impact of these crimes, the violence and concerns over safety continue to be the priority for all retailers, regardless of size or category,” he added.

“The annual survey by the trade group collected information from 177 retail brands across 28 different sectors — including apparel, jewelry, grocery, and department stores — and accounted for more than 97,000 retail locations and $1.6 trillion in annual retail sales,” the Washington Examiner stated.

“Retailers reported that organized retail crime, or ORC, is their top concern due to the heightened levels of violence they have experienced. Sixty-seven percent of respondents said they have seen a spike in violence from ORC gangs compared with a year ago. Twenty-eight percent reported they had to close specific locations, 45% said they had to reduce operating hours, and 30% said they had to reduce or alter in-store product selection as a direct result of crime,” the media outlet noted.

As violence and theft hammered the retail industry, stores told their employees to take a “hands-off” approach to thieves in order to protect them. There was also a 17 percent increase in retailers who instructed their employees to do nothing at all if theft was taking place by shoplifters. That was like holding the door open for thieves.

“While employers have been shielding their employees from danger, retailers have also been upping their prevention efforts. About 46% have turned to outside security personnel to patrol their shops, while 53% have increased their technology and software solution budgets in the past year. About 54% have increased employee workplace violence training,” the Washington Examiner reported.

“Retailers are piloting and implementing a number of loss prevention practices to deter, prevent, and mitigate these substantial losses,” Loss Prevention Research Council Director Read Hayes asserted, according to the news outlet. “In addition to enhancing traditional security measures, many are also allocating resources to innovative emerging technologies for future prevention.”

Democrat-led cities are the hardest hit by organized retail crime. Those include Los Angeles, San Francisco, Oakland, Houston, New York, and Seattle, according to the survey.

The survey pointed out that the items stolen are not necessarily the most expensive, but the ones that are the easiest to resell. That is a shift from the way the thieves previously operated. Although they still covet luxury goods; outerwear, batteries, energy drinks, shoes, and kitchen accessories are among the products that can be fenced quickly and, therefore, are targeted.

The survey came out at the same time that Target announced it was shuttering nine stores in four states: California, New York, Oregon, and Washington. The retail giant cited theft and violence at the locations as the reason.

“We know that our stores serve an important role in their communities, but we can only be successful if the working and shopping environment is safe for all,” the retailer remarked via a statement on Tuesday.

Target has been railing about organized retail crime in its stores for some time now.

“In May, Michael Fiddelke, Target’s chief financial officer, said that if the shrinking trend continued, the retail chain would lose $500 million in profit. The company has also been spending more on security, including third-party guard services,” the Washington Examiner said.

“Retail shrink refers to the difference between how much inventory a retailer is supposed to have on its balance sheet and how much it actually has. Shrink can be anything from shoplifting to employee theft, cashier error, and damaged goods sent by the vendor,” the outlet explained.

“Theft of all kinds accounted for 65% of retail shrink in 2022, similar to previous years,” the LA Times reported. “External theft — including organized retail crime — caused 36% of losses, while employee theft caused 29%, the survey said. ‘Process, control failures and errors’ caused 27%, while the final 7% was ‘other” or “unknown.’”

Macy’s and Dick’s Sporting Goods executives have also warned Wall Street about the impact that organized retail crime is having on their businesses.

Big-box retailers such as Target and Kroger as well as dollar stores have all sounded the alarm over increasing inventory theft and organized retail crime.

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