By The National Retail Federation
Retail crime, violence and theft continue to impact the retail industry at unprecedented levels. The effects of these criminal acts are not isolated to large national brands or large metropolitan cities. Daily media reports show that no business is immune, and these issues touch retailers of all segments, sizes and locations across the United States. The National Retail Federation’s National Retail Security Survey, now in its 32nd year, surveys loss prevention (LP) and asset protection (AP) professionals throughout the retail industry to capture data about risks, threats and vulnerabilities from the previous fiscal year, as well their forward-looking priorities. The study also asks about retailers’ loss prevention and asset protection programs. For the second year in a row, the study was conducted in partnership with the Loss Prevention Research Council. Shrink or shrinkage is the measurement of losses calculated by a retailer during a specific period of time, categorized across various means of retail loss. This year’s study found that the average shrink rate in FY 2022 increased to 1.6%, up from 1.4% in FY 2021 and in line with shrink rates seen in 2020 and 2019. When taken as a percentage of total retail sales in 2022, that shrink represents $112.1 billion in losses, up from $93.9 billion in 2021. While retail shrink encompasses many types of loss, it is primarily driven by theft, including organized retail crime (ORC). Theft – both internal and external – accounts for nearly two-thirds (65%) of retailers’ shrink. However, for some sectors, theft can represent more than 70% of overall shrink. While theft has an undeniable impact on retailer margins and profitability, retailers are highly concerned about the heightened levels of violence and threat of violence associated with theft and crime. Retailers’ top priority remains providing a safe workplace for associates and a safe shopping experience for customers. Eighty-eight percent of retailers report that shoplifters (overall) are somewhat more or much more aggressive and violent compared with one year ago. And those that specifically track the number of violent shoplifting incidents reported that they saw their number of shoplifting events involving violence increase by over one-third (35%) on average. ORC, which is one of many types of retail theft, is another area where retailers are seeing higher levels of violence. Last year, 81% of respondents reported that ORC offenders had grown more violent. Compounding that this year, more than two-thirds (67%) of respondents said that they were seeing even more violence and aggression from ORC perpetrators compared with a year ago. Of course, not all crime occurs in person; retailers also reported increases in areas such as ecommerce fraud or phone scams to solicit gift cards or cash. While less common, sizeable minorities reported increases in delivery fraud; stolen goods being sold on third-party sites; return fraud; and loyalty fraud and abuse. As a result of this increasingly alarming crime landscape, retailers continue to make investments in personnel, budgets, technology and other resources to prevent theft and fraud. They also are partnering with law enforcement at federal, state and local levels. Despite these ongoing efforts, many retailers have been forced to take more drastic action, including reducing operating hours in some locations (45%), reducing/altering the availability of products in stores (30%), or even closing some locations (28%). In 2022, NRF successfully advocated Congress to pass the bipartisan INFORM Consumers Act as part of the omnibus spending package, which was signed into law in January 2023. Now in effect, the measure will help bring transparency to online marketplaces by requiring them to verify the identities of high-volume third-party sellers. Doing so will help curb the fencing of stolen merchandise and address the sale of counterfeit goods. Market transparency alone will not stop ORC, which is why NRF strongly supports the Combating Organized Retail Crime Act (H.R. 895/S. 140). The bipartisan legislation has been introduced in both the House and Senate and continues to gain co-sponsors. In addition to efforts in Congress, NRF has worked closely with federal agencies, state lawmakers, local law enforcement and news media across the country to draw attention to ORC. The effort has been successful, with at least 34 states passing ORC laws, as NRF continues to urge additional states to update the definition of ORC and adopt sufficient criminal penalties.
Washington, DC: National Retail Federation, 2023. 24p
