Last year, it seemed like every large retailer in the country was urging the issue of organized retail crime. Companies cited increased thefts as a reason behind store closures and declining profits.
But how much did companies ACTUALLY lose?
Because according to the stats…
There hasn’t been any evidence to suggest a nationwide epidemic of retail theft.
Here’s what you need to know…
How Much Organized Retail Crime Is There REALLY?
Following the pandemic, big box retailers were cracking down on theft in stores. More specifically, they focused their efforts on targeting “organized retail crime”.
This type of theft is defined by operations where people steal items in bulk, often through online stores. It was most prevalent during the pandemic due to staff shortages in-store and high demand online.
Executives claim that these thefts are costing their companies big time. Target’s CEO stated that thefts have resulted in the company losing billions.
But this data is hard to pin down. Retailers don’t report data on theft and they often don’t get law enforcement involved in incidents…
So where are they getting this information from?
Most of the information we get is from the National Retail Federation survey asking companies to report their “shrink”. Shrink is considered any losses of physical merchandise, including:
- Organized retail crime
- Theft from employees
- Mistakes in tracking and accounting
Clearly, shrink accounts for much more than just petty in-store theft.
But even then…
The survey showed that shrink has barely changed in the past decade.
RETAILERS ON AVERAGE SAID SHRINK AFFECTED 1.6% OF SALES — THE SAME AS IN 2020 AND 2019.
So what has these companies so worked up about alleged organized retail crime?
Well… experts believe that the stories that these retailers are spinning are to cover up something else entirely.
Underperforming Businesses And Stingy Customers
Experts believe that companies use organized retail crime to…
“Cover for closures of underperforming locations and lackluster financial results.”
The report writes:
“WHILE THEFT IS LIKELY ELEVATED…COMPANIES ARE ALSO LIKELY USING THE OPPORTUNITY TO DRAW ATTENTION AWAY FROM MARGIN HEADWINDS,”
Due to higher inflation…
Shoppers are starting to become more critical about their purchases…
And are choosing to spend money on higher-priority items.
Many stores have been losing profits because shoppers are thinking twice about what they buy. Target, for example, reported its first sales drop in seven years.
In response to the missing shrink…
Many stores started introducing anti-theft investments, which include:
- Locked merchandise
- Increased security staff
- De-escalation training
- Limited self-checkout use
But this doesn’t deter thieves…
ITS DETERRING THE CUSTOMERS
More than one-third of shoppers say that locked-up products hurt their perception of a store.
Even more so, 46% of customers are abandoning their purchases and buying somewhere else when the item they’re looking for is locked.
But in the face of this organized retail crime scare…
It might seem like things are finally starting to cool down.
After all, Walgreens’s finance chief suggested that “maybe we cried too much last year” about shrink.
Maybe the problem was never about increased crime in stores…
Maybe it was all about retailers using a scapegoat to excuse some bad business practices.
Be Great,
GCTV Staff
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