From various locations in the United States, it was reported that the retail industry suffered substantial losses last year. Retail theft, along with other factors of shrinkage, led to a significant drain of $112 billion from stores in 2022.
According to a study by the National Retail Federation, theft played a crucial role in these substantial losses. The report mentioned that both external and internal thefts were responsible for a whopping 65% of the total shrinkage in 2022. Such theft and shrinkage include not only direct theft but also losses from operational blunders and systemic errors.
When examining the breakdown further, statistics show a nuanced picture of the problem. Organized retail crime, a type of external theft, accounted for 36% of total shrinkage in 2022, a slight decrease from the 37% in 2021. Meanwhile, internal theft saw an uptick, with its contribution rising to 29% in 2022 from 28.5% in 2021.
Also, process and control failures contributed 27% to the overall shrinkage figures. There was also a 6% of loss that remained unexplained or categorized as ‘unknown loss’ in the retail sector. Such a substantial loss has long-term implications for the retail industry and its sustainability.
One distressing highlight of the report is the change in behavior of shoplifters. A staggering 88% of retailers reported that they felt shoplifters have become more aggressive and increasingly violent over the past year. Incidents like the flash mob-style ransacking in Philadelphia on September 27th, 2023, only add to this concern, suggesting a potential trend for the current year.
With such data coming to light, it’s evident that the retail industry must bolster its security and operational strategies. Addressing both external and internal threats is vital for the long-term health and profitability of retail businesses across the nation.