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December 19, 2024
Retail Theft Has Soared 90% vs. Pre-Pandemic: What Does the Future of Loss Prevention Look Like?
While retailers are expecting a booming holiday season to close out the year, at least one statistic among many other positive indicators doesn’t look so merry or bright.
According to the National Retail Federation’s (NRF) latest “Impact of Retail Theft & Violence 2024” report, there has been a staggering 93% increase in the average number of shoplifting incidents compared to 2019. Further, there was an equally significant 90% increase in dollar value lost as a result of theft and fraud compared to the pre-pandemic era.
The acceleration of theft incidents hasn’t necessarily slowed in recent years, either: According to the NRF, a 26% increase in theft incidents was reported between 2022 and 2023 by retailers surveyed.
In Response to Increased Retail Theft, Retailers Have Had to Impose Friction in the Form of Security Measures
With survey respondents indicating that the nature of crime has shifted — for instance, NRF data shows that thieves are now more likely than ever to operate in groups, and the threat of violence has become significantly more common — retailers appear to have reluctantly adopted stricter security measures.
“This isn’t what we were used to. This isn’t the shoplifting I was apprehending 30 years ago,” David Johnston, NRF vice president of asset protection and retail operations, told FOX Business. “These are people who are shoplifting because they know when they have an outlet to sell this merchandise to.”
In response, retailers have turned to locking up product — and thereby inconveniencing legitimate customers — hiring armed loss prevention officers or other contractors, cutting store hours, and even reducing the amount of product available on store shelves.
With some stores in the United States essentially becoming mere vending machines, as Johnston suggested, it’s clear that customer service and the overall experience of safe shopping have become significantly imperiled.
You've heard of Organized Crime, but have you heard of Organized Retail Crime? Organized Retail Crime, also known as Organized Retail Theft, is the large-scale theft and resale of retail merchandise. Learn why the #FBI investigates these crimes: https://t.co/zZLnainS6u pic.twitter.com/LEwNM5Wkig
— FBI Honolulu (@FBIHonolulu) December 13, 2024
Organized Retail Crime Rearing Its Head: Can It Be Combated Without Losing Loyal Customers?
The majority of concern surrounding this spike in retail theft hinges on one concept: organized retail crime (ORC). In fact, ORC was the top issue cited by retailers in the NRF survey as having become more of an urgent concern over the past year — 76% said as much.
“Not every shoplifter is going out there and selling their stolen goods online or at a flea market. They’re selling them in larger mass quantities to these local, regional or transnational organizations who are helping to feed the system,” Johnston said.
With the NRF calling for passage of the Combating Organized Retail Crime Act, as FOX Business outlined, Johnston made it very clear that targeted legislation aimed directly at curtailing the efforts of these sorts of criminal enterprises was key to the industry’s future health.
“We need the coordination between state, local and federal law enforcement to go after these organized retail crime groups, because when you dismantle one of those you then dissolve all the underlying opportunities or needs of their supply, which is the shoplifting that takes place in the stores,” he said.
The passage of that act would establish an Organized Retail Crime Coordination Center within the Department of Homeland Security to “coordinate the federal law enforcement activities related to organized retail crime,” per Congress.gov, in addition to the expansion of several related laws.
Discussion Questions
What motivations are behind the massive surge in retail theft, particularly concerning organized retail crime? Can these motivations be addressed by legislation or by other means?
How can retailers protect their product from would-be thieves or vandals without harming the consumer experience?
Are existing loss prevention protocols or procedures enough to prevent surging retail theft? If not, what measures need to be taken to curtail criminal behavior in the sector?
Poll
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The “motivations” are a general decline in the economic well-being of a greater percentage of the population – the wealth gap. First, consumer shoplifting. These are not all kleptomaniacs. I suspect that much of this increase is out of desperation. Every city in North America has a ‘tent city’ – it wasn’t always that way. These people are literally in survival mode. This is a outcome of economic disparately. As for the organized crime, that’s a whole different issue. It’s big money, and easy money. Plenty of channels to sell it. There’s nothing a store team can or should do to stop this – risking their lives isn’t worth the $15 per hour on average these workers earn. Even a security guard is no match for a gang of violent criminals grabbing armfuls of merchandise and walking out the door. Retailers will simply close these stores. Period. Locking up all their merchandise is the antithesis of retailing and everyone knows it.
There are no easy answers to all this, but retail has dramatically changed as a result of theft since the pandemic. Coordinating law enforcement to go after ORC will be helpful, but these organizations also face their own fiscal challenges, even though retail crime represents a significant percentage of property crime. But the bigger issue is the lack of consistency in data collection of crime stats across cities and states make it hard to compare – law enforcement is missing valuable insight by not coordinating, but you need consistent and reliable data collection and common interpretation.
While I can’t speak for the motivation in the alleged shoplifting increase, I can find a very clear one for this particular survey
How fortunate they found exactly what they were looking for!
I’ve worked with Sensormatic before. They used to sponsor the NRF’s annual shrink study, done by the University of Florida. They didn’t force the numbers then, and I doubt they’re forcing it now..
To be honest (and most people know my feelings about this, anyway), I’d love to see actual data. Dollars or units lost to shoplifting, the impact of THEFT on gross margin, things like that. I don’t think shrink has risen, and I appreciate the retailer sentiment, but if something is successfully shoplifted, how would the retailer know? I feel like there’s a bit of a herd mentality happening here. Percents reported don’t mean anything to me. How do you know? And how can you quantify it?
Quite. And I’m not saying “they lied”, exactly, but rather that they presented the data in a way that worked best for them: for example, much of the “data” isn’t people reporting (they have proof) things are worse, but rather those people feel things are worse. Is it really that theft is up 93% or is it that 93% of people feel theft is up ? It may be the former, but these are different thngs, and often mistaken for one another. Like you I’d want to see all the questions, and who and how they were answered before I book passage on the hype train.
The NRFs numbers should be taken with a massive grain of salt. Their figures on retail crime are all over the place and they have recently changed the reporting because of previous errors. There’s also some context lacking here. The NRF’s previous reports on this matter show that 2019 was a very low year for retail theft with an average of 689 apprehensions per retailer for shoplifting. A 93% increase would take this to 1,329. This is still well below the numbers reported in 2016, 2015 and 2014 – the latter of which had an average of 3,455 apprehensions. The same pattern applies to the average dollars lost figures. Obviously, any and all retail crime is bad and there is an issue here – but I find these numbers a little odd.
Absolutely.
I share your thoughts. There’s no mention on the methodology for these statistics. We don’t even have a consistent definition of what’s ORC vs garden variety
While I don’t question the existence of organized retail crime as I have seen it in action, shortage is rarely one factor. Also brings into question the accuracy of inventory systems, ERPs and the ability to accurately track and record inventory movement, etc. How much of this is truly inventory theft vs lack of accuracy and visibility with cross channel selling and returns? Don’t forget, inventory shrink is a measure of inventory against sales. As sales are constrained by inventory lock ups, inventory shortage as a percent of sales will increase.
Yes, the NRF used to publish theft/shrink as a percentage of sales. It now seems to have been abandoned!
The retail crime crisis stems from one main issue: insufficient law enforcement. Many communities have reduced funding for police, and even in areas where funding remains, officers often hesitate to confront retail criminals. They fear repercussions, including job loss, if they need to use force.
I hope that on January 20, we will see a change. Along with securing the border and implementing practical economic solutions, I believe voters are calling for sensible law enforcement.
David, you hope we see a change on Nov 5? It’s December 20, things went your way.
It now reads January 20. Thank you for calling the error to my attention. Db
The struggle is real. Let’s look at the estimated financial impact of theft – a staggering $73 billion in lost sales from theft in the US (2022) with UK losses doubling to £3.3 billion in 2023. The problem has become so pervasive, and nuanced, that after more than 3 decades, NRF has delayed the release of its annual shrink research to allow time for a full reevaluation of its methodology.
So what is the preferred strategy for loss prevention? On one side of the continuum, a show of force; retailers beef up physical security, intrusive cameras atop self-checkout counters and large, visible tags attached to clothing. On the opposite side, subtle, embedded solutions like radio-emitting threads woven directly into garments. We can debate the economics but, I believe, the bigger consideration centers around retailers’ balance between brand identity, customer experience and loss prevention needs.
I’m skeptical of this 93% number. There’s a well known truth in measuring crime that once it becomes a focus, reports of the crime almost always increase — even though that crime is often decreasing as the reported numbers increase. That’s not to say that I believe shoplifting is under control. But the irrationality of the choices retailers are making in what they lock up suggests large bureaucracies are being pummeled with big numbers and making choices unlikely to help — and may even make things worse. Seems time for retailers to take a deep breath, be certain of what’s really going on, and find savvy ways to respond. Anyone looking for examples of the power of such clever thinking should read Rory Sutherland’s Alchemy.
Gee, slash payroll, load down associates with tasks on mobile phones and is it a wonder that theft is up? Put humans on the floor and watch shrink shrink.
Setting aside the research, the marketplace is showing signs of increased retail theft.
More items locked up. Retailers would not be investing in locking up items and the known decline in sales without reason. Flashlights locked up in the camping section of a Walmart seems extreme but was done for a reason.
Frequently stolen items not being re-ordered by retailers. Not getting de-listed but not being re-ordered. Which has the same effect.
The opportunity for brands and retailers is to emphasize online sales. Offer a subscription service for frequently replenished items. Selling online reduces the risk of organized retail theft. Reduces cost of sales. Locks in sales improving forecasts. Improves shopper experience.
Brands not being re-ordered could explore direct to consumer with subscription service. Frequently stolen items will be those with larger margins to support the added service.
Which leads to “porch piracy” and delivery truck hijacking – just pushing the crime to your front door. Meanwhile our $90,000 *initial salary* cops commute in from the outer suburbs and sit in their squads blocking the sidewalk all day, then drive back home. Who is actually profiting off all this?
As some retailers resort to arming store associates with body cameras, many store experiences are shifting from warm and friendly to distrusting and threatening. Expect to see more surveillance technology and vigilant staff in stores, and consumers going online for fewer hassles in 2025.
Nah, retailers won’t want to spend the money. We’ve been talking about Video Analytics for 20 years.
Certainly no lack of passionate feelings about this topic, as indicated by the responses already posted. The articles, discussions with retailers over the last couple of years, and responses below brought two different thoughts to mind.
First, retailers should look at this as an opportunity to reward their loyal customers. They should consider how they could make restricted products easier to access for their best customers. Not to prescribe a solution, but we all carry a device that can communicate with locked devices to allow access to secured products.
Second, retailers need to seriously consider and thoughtfully address the personal safety concerns and increased anxiety of store team members, along with those of shoppers. There are technologies (ex: Theatro) and services that can help provide a safer environment and quicker response to actual incidents. Investing in these solutions creates greater employee and shopper loyalty. That loyalty is likely to be paid back in terms of lower turnover and increased spending.
It comes down to guns. Way too many guns out there; you don’t know who’s carrying and who’s on a hair trigger. Way too easy to steal, traffic, and buy under false pretenses. Police won’t put their lives at risk and we definitely don’t want store clerks to do so. Heck, have you seen the articles this past week where police are re-selling military-grade weapons to the public? If the NRF seriously wants to cut retail theft, then they need to get out in front and demand real firearms reform. Everything flows from that.
The current response to retail theft is creating high-friction environments that alienate shoppers. Instead of policing and turning stores into prisons for products, retailers need to focus on solutions that prioritize the customer experience. Solutions like SKU-level shopping, for instance, can make the buying journey smoother while boosting efficiency and maintaining product security.
Existing protocols aren’t working because they’re reactive, not preventive. Without strict enforcement and marketplace accountability, retail theft won’t stop.
The surge in theft, especially organized crime, is driven by weak laws, online marketplaces that enables reselling, and the lack of fear among thieves.
As for retailers, locking up products punishes honest customers more than it deters criminals. To at least limit the extent of retail theft, retailers should instead invest in better options like staffed assistance zones, advanced inventory tracking, and AI-driven surveillance.