Shrinkage — a measurement of losses calculated by retailers — has been the topic of earnings calls from everyone from CVS Health (CVS) -) to Foot Locker (FL) -) to Target (TGT) -), but with the holiday shopping season creeping up on us, consumers should be worried about a rise in a dangerous trend when it comes to retail theft.
It doesn't take much effort to find videos of large groups of people grabbing large amounts of merchandise off of store shelves and racks before running out of the stores.
Related: Target Closes 9 stores in 4 states amid surge in 'organized retail crime'
The latest numbers from the National Retail Federation's annual Retail Security Survey show that while the problem has gotten worse in recent years, shrinkage as a percentage of of sales has remained within historical limits.
Retailers reported average shrinkage of 1.6% in 2022. While that number was from 1.4% in 2021, it is in-line with the 1.6% that was reported in 2020 and 2019. Retailers reported average shrinkage of 1.4%, 1.3% and 1.2% in 2018, 2017 and 2016, respectively.
When taken as a percentage of total retail sales, shrinkage represented $112 billion in losses for retailers in 2022 compared to $94 billion in losses the previous year, with internal and external theft accounting for about two-thirds of losses.
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But the biggest issue retailers are facing is the rising level of violence associated with the shrinkage they are seeing.
"Retailers are seeing unprecedented levels of theft coupled with rampant crime in their stores, and the situation is only becoming more dire," David Johnson, NRF VP of asset protection and retail operations, said. "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."
Organized retail crime — where thieves coordinate their efforts with criminal networks to steal and move large amounts of merchandise — became more of a budgetary priority for 78% of retailers in 2022 compared to 71% of retailers in 2022. More than 70% of retailers also made combatting violence during a criminal act more of a budgetary priority last year after the category wasn't even part of the consideration in 2021.
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