The simple act of running errands has undergone a noticeable transformation in recent years. What was once a straightforward trip to pick up everyday necessities now frequently involves navigating reduced operating hours, encountering locked display cases, and confronting the specter of stores threatening to shutter completely. This shift, according to a chorus of retailers, is largely attributable to a significant surge in theft, forcing companies to adopt increasingly stringent, and often frustrating, security measures.
Major players in the retail landscape, including Target, Walmart, Dollar General, and Home Depot, have vocally expressed their alarm over retail theft in recent months. The frequency with which missing inventory was discussed during recent earnings calls has reached unprecedented levels, as evidenced by data compiled by Bloomberg. This collective concern underscores a problem that retailers contend is eroding their profitability and altering the shopping experience for millions.
At the heart of retailers’ financial woes is an industry term known as “shrinkage.” This refers to the discrepancy between the inventory a store’s balance sheet reflects and the actual inventory on hand. While shrink encompasses various factors, such as lost or damaged goods and theft by employees, a significant portion of the recent concern, according to executives, stems from a rise in organized retail theft.
Organized retail crime involves thieves stealing merchandise with the express intent of reselling it for profit, often through online marketplaces like Amazon or eBay. David Johnston, vice president of asset protection and retail operations at the National Retail Federation (NRF), describes this as a growing problem. He emphasized that the shoplifting occurring now serves a “larger purpose” to support a burgeoning organized retail crime effort across the nation.
NRF reports underscore the scale of this issue. A 2020 report indicated that organized retail crime cost retailers an average of $719,548 per $1 billion in sales that year, a notable increase from $703,320 in 2019 and a significant jump from nearly $454,000 in 2015. More recently, 63 surveyed retailers reported a 26.5% increase in organized retail crime incidents in 2021, painting a picture of escalating losses.
However, the narrative surrounding the severity of retail theft is not without its complexities and challenges to established facts. A lack of comprehensive federal crime statistics makes it difficult to ascertain the true national scope of the problem. Some critics have openly questioned whether the concerns voiced by retailers are, in fact, overblown, suggesting that the industry’s accounting practices may contribute to a murkier picture.
For instance, while a 2022 report from the NRF highlighted $94.5 billion in losses due to shrink in 2021, up from $90.8 billion in 2020, the average shrink rate actually saw a decrease, falling from 1.6% to 1.4%. This suggests that the apparent spike in dollar figures might be more accurately attributed to inflationary pressures leading to higher prices rather than a pure increase in the volume of shrink or theft incidents. Johnston himself admitted that NRF’s estimate that 37% of 2021’s shrink loss was related to external theft is “not scientific” but a “best estimate.”
Mark Cohen, director of retail studies at Columbia Business School, offers a critical perspective, describing the accounting for theft as “somewhat of an ambiguous determination.” He points out that in a period of inflation and after years of economic disruption, many companies may be using theft as a convenient explanation for underperforming financial results. “Whether they’re using it as an excuse, or as a valid reason, it’s difficult to know,” Cohen observed.
Indeed, at least one major retailer has publicly scaled back its initial alarmist claims. Walgreens, which previously attributed several store closures to rising theft, saw its then-CFO James Kehoe admit in January that the company may have “cried too much last year” over shrink, noting that its shrink figures had since stabilized. During a subsequent earnings call in June, executives announced further store closures but notably made no mention of shrink or theft as contributing factors.
The federal data landscape further obscures clarity. In 2021, nearly 40% of U.S. law enforcement agencies failed to submit data to the FBI’s revised crime statistics collection program. This significant gap renders comprehensive analysis of crime trends exceedingly difficult, according to Charis Kubrin, a criminology professor at the University of California, Irvine. She posits that while some localized increases in theft are likely, claims of nationwide retail theft being “out of control” or “particularly alarmist” headlines are likely “off base” given the current data limitations.
Conversely, other experts argue that law enforcement data is inherently unreliable for gauging the true extent of theft, as incidents tend to be underreported. Read Hayes, a criminologist at the University of Florida and director of the Loss Prevention Research Council, an industry-supported group, highlighted this challenge: “The police only know what the retailer tells them, and the retailer only reports a certain amount because they don’t know or they haven’t detained anybody.” This suggests a systemic challenge in accurately capturing the scope of the problem regardless of reporting mechanisms.
In the face of these uncertainties and financial pressures, retailers have widely implemented measures that directly impact the customer experience. The most visible and often most frustrating of these is the locking up of entire aisles of merchandise. Shoppers now routinely encounter items ranging from toothpaste and deodorant to underwear, socks, and even $1.18 packs of razors encased behind security glass, necessitating an employee’s assistance for purchase.
This practice, while intended to deter shoplifters, invariably creates significant inconvenience. Customers frequently report extended wait times, sometimes up to 40 minutes, to access basic items. Corey Potter, a 30-year-old video editor, recounted waiting 15 minutes for an employee to unlock a case at Target. Such delays cause immense frustration and can lead to a decline in customer satisfaction, potentially driving shoppers to seek more convenient alternatives, notably online retailers like Amazon.
Walgreens CEO Tim Wentworth acknowledged the direct negative impact of these measures, stating, “When you lock things up, for example, you don’t sell as many of them. We’ve kind of proven that pretty conclusively.” Despite this, the company plans to continue the practice, viewing it as “hand-to-hand combat” against theft. Retail analyst Scott Mushkin of R5 Capital described locking items as a “blunt tool and self-defeating,” suggesting it is not a viable long-term strategy as it alienates customers and pushes them towards online shopping.
The cost of implementing such security measures also filters down to the consumer. Mark Cohen articulated this plainly: “Make no bones about it, it’s a price that we all pay.” Dollar Tree CEO Rick Dreiling similarly noted that while efforts are made to mitigate shrink, the associated costs “get passed on to the consumer eventually,” whether through higher prices or the cost of added security.
Beyond direct theft, a UBS note, based on insights from a former manager of asset protection and risk mitigation at a major retailer, suggested that retailers themselves are missing crucial elements in their approach to shrink. Two key overlooked factors are insufficient staffing levels and inefficiencies within the supply chain. The expert highlighted that “the lack of sufficient staffing remains a major contributor to shrink, as shrink monitoring technologies are only effective insofar as they flag risk.” Human intervention is crucial, yet “staffing has declined” even as organized retail crime has grown and become more violent.
Losses can also accrue along the supply chain, from vendors to distribution centers to the stores themselves. This indicates that the problem is not solely a customer-facing issue, but one embedded in operational practices. The UBS expert further recommended that retailers make “substantial investments” in innovative technologies, such as AI and advanced surveillance, rather than relying on “padlocks and off-duty officers that have already been in place for decades.”
Recognizing the complexity of the issue, lawmakers have begun to respond. California Governor Gavin Newsom has proposed new laws to expand criminal penalties for retail theft and auto burglaries, initiating new legislation and an organized retail crime task force in 2022. He has committed $267 million to cities and counties to bolster arrests and prosecutions, signaling a robust legislative push to address the crisis.
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Similarly, New York Governor Kathy Hochul has announced a $40 million plan to combat shoplifting, allocating $25.2 million to state police, $10 million to district attorneys, and $5 million to local law enforcement. Additionally, her package offers a $3,000 tax credit for shop owners incurring over $12,000 in yearly security expenses. However, Nelson Eusebio of the National Supermarket Association deemed Hochul’s proposal merely a “half-step,” arguing it insufficient to deter serial shoplifters and suggested more funding should target local law enforcement and defense attorneys rather than state police, who are less involved in street crime in urban areas.
Another legislative effort, the bipartisan Inform Consumers Act, which became effective in June, targets organized retail theft by mandating online marketplaces like Amazon and eBay to verify sellers’ information. This aims to disrupt the resale market that often fuels large-scale theft operations. These varied legislative approaches underscore the perceived urgency of the problem from a governmental standpoint, but their ultimate impact on the ground remains to be fully seen.
Retailers have also advocated for stricter penalties for stealing, pushing for reexamination of felony thresholds. Between 2000 and 2018, at least 39 states raised the value of goods required for a crime to be elevated from a misdemeanor to a felony, often to reduce prison overcrowding. California’s Proposition 47, passed in 2014, notably raised the petty theft threshold from $500 to $950.
Yet, research on the impact of these changes offers mixed conclusions. Charis Kubrin’s 2018 paper found that Prop 47 had no measurable effect on robbery or burglary rates. While larceny and motor vehicle thefts appeared to increase “moderately,” the results were statistically small enough that they could be attributed to chance. Furthermore, research from The Pew Charitable Trusts indicated that raising felony theft thresholds had no discernible impact on overall property crime or larceny rates, with states that increased their thresholds experiencing similar average crime decreases as those that did not.
In this complex environment of contested data, frustrated consumers, and evolving legislative responses, many experts believe the current heightened levels of shrink may be a passing phase. Dollar Tree CEO Rick Dreiling suggested in May that the “consumable shift and this shrink impact are transitory,” noting that shrink tends to be cyclical. Joe Budano of Indyme echoed this sentiment, optimistically predicting that “maybe in a year or two, (retailers will) calm down a bit and they’ll maybe be able to pull back on some of this.”
Ultimately, the challenge for retailers lies in striking a delicate balance: protecting their inventory from theft without alienating the very customers they depend on for sales and profitability. A truly effective solution will likely demand a multifaceted approach, integrating thoughtful staffing strategies, robust supply chain management, and innovative technologies, alongside a clearer, more data-driven understanding of the problem itself, rather than simply enclosing the problem behind glass.
