I need to update my previous article on retail theft.
In it, I cited figures from the National Retail Federation’s 2022 Retail Security Survey.
I really should have referred to the 2023 version of the same report.
Nonetheless, a comparison of the two reveals some useful insights into statistics and the use thereof.
It turns out that the inventory shrink at retail level in 2022 was 1.6 percent of the total, compared to the 2021 rate of 1.4 percent. Which doesn’t sound that significant.
But it also turns out that the total amount of shrink has increased by 19.4 percent: “That shrink represents $112.1 billion in losses, up from $93.9 billion in 2021,” says the report. “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.”
On the one hand, the percentage of shrink of the total has increased by a mere 0.2 percentage points. On the other hand, the dollar value of shrink has gone up by an enormous 19.4 percent.
Both statements are true. You can decide how much of a problem shrink is by which interpretation you choose.
In the food and beverage sectors, the items most likely to be stolen did not change between the two years: they remain “alcohol, candy and gum, energy drinks, frozen seafood, fresh meat and seafood.” So fresh produce is not a major target.
One area of concern: in the 2023 study, “a strong majority of retailers [88 percent] agreed that shoplifters overall are more aggressive and violent than a year ago.”
What responses did the retailers take? The 2023 survey: “5.3% reduced specific store(s) operating hours; 29.7% reduced or altered in-store product selection(s); 28.1% of respondents reported closing a specific store location(s).”
One area that the reports did not address was the relation of staffing to shrink. Retailers have tended to cut back on employees in recent years; you can look hard for a clerk at a Target these days. Nonetheless, as Business Insider recently reported about Walmart BB #:143789, “Employees and customers have said the company’s reliance on self-checkout has led to more theft.” The giant retailer has removed self-checkout from three stores in Albuquerque, NM.
Another Business Insider article quoted loss prevention expert Matt Kelley: “For the most part, retailers have been thinking about self-checkout through a financial-savings and customer-experience perspective. But inherently, that means there’s going to be less eyes on a transaction. And there’s going to be more of an opportunity for the dishonest people to be dishonest.”
Self-checkout leads to higher rates of theft. But it cuts back on the number of employees needed. What if the net savings in staff costs offset—or more than offset—the losses to shrink?
I imagine that the retail industry is right this moment hiring a business school professor to make these calculations in hard dollar terms. But I wouldn’t be surprised if the increase in shrink was more than offset by lower labor costs.
A Kroger store in Cool Springs, TN, BB #:100073 has taken the opposite tack: it has gone to total self-checkout. But it says that staff is still available at the front to help customers who don’t want to check out themselves.
