The Shocking Claim You've Seen About Organized Shoplifting Isn't True. Here's Why Everyone Believed It. Retail giants like Target and Walgreens have said the uptick in organized crime contributed to store closures.
By Amanda Breen
Key Takeaways
- The National Retail Federation (NRF) has retracted its claim that "organized retail crime" caused $45 billion in annual losses in 2021.
- The error was based on outdated 2016 statistics, not the actual share attributable to organized theft in 2021.
- Despite the correction, the NRF maintains that organized retail crime continues to be a significant threat to retailers nationwide.
The National Retail Federation (NRF) just retracted a startling statistic that's been making headlines for nearly two years.
In its initial report, the NRF claimed that half of the retail industry's $94.5 billion in losses in 2021 were due to organized theft, resulting in an astounding $45 billion in losses. Now, the organization admits it was overstating the impact of organized shoplifting on the retail industry, CBS News reported.
The issue began with the misrepresentation of an inaccurate figure drawn from Senate testimony by Ben Dugan, the President of the National Coalition of Law Enforcement and Retail.
Spokeswoman for the NRF, Mary McGinty, told The New York Times that the mistake occurred when an analyst from an outside advisory firm, which helped produce the report, linked to Dugan's quote in the 2021 survey.
Dugan incorrectly cited the $45 billion figure, which was pulled from a 2016 National Retail Security Survey referring to the overall cost of shrink in 2015. Retail "shrink" is an industry term for merchandise losses from various sources, such as improper scanning, vendor fraud, and fraudulent returns.
Trevor Wagener, the chief economist at the Computer & Communications Industry Association, told the outlet that organized shoplifting is likely responsible for just 5% of shrinkage from 2016 to 2020.
New data from the Council on Criminal Justice shows a 16% increase in shoplifting reports across two dozen cities from 2019 to early 2023. This suggests a shift in criminal activity, though when New York City's data is extracted, an opposite trend of a 7% decrease across the other areas emerges.
The NRF has retracted the false claim and amended its report, but it continues to assert the severe and pervasive nature of organized retail crime against businesses of all sizes. Some retail giants, like Target and Walgreens, have cited the spike in retail crime as a factor in their decisions to shutter stores.
Related: Major U.S. Retailers Urge Congress to Help Amid Smash-and-Grab Crime Surge
But some experts have their own suspicions. Investment bank William Blair sees these actions as potential distractions from underlying business issues, per CBS. Retail analyst Neil Saunders backs that perspective, too, arguing that while crime is undeniably an issue, the actual scale remains elusive due to a lack of concrete data. Saunders calls for a better-defined quantification of the problem rather than the prevalent rhetoric.
