The National Retail Federation (NRF) has retracted a frequently cited statistic on the causes of lost retail inventory, saying “organized retail crime” does contribute to shrinkage but is more difficult to quantify than it previously said.
Retail shrink is a broad term that tallies all the inventory lost between its purchase from a manufacturer and its sale to an end customer. The final number covers everything from theft (by either employees or non-employees) to simple mistakes, administrative and operational errors, and in-transit, supply chain, or third-party losses.
Added together, the total shrinkage rate reported by a survey of U.S. retailers was 1.44% in 2021, summing up to $94.5 billion in lost value, according to an NRF survey. That number is still accurate, but the NRF has now retracted a claim that $45 billion of the total could be attributed to organized retail crime (ORC), which describes groups of thieves that steal goods and later resell them through fraudulent means or black markets. The original statistic was published in NRF’s April 13 report titled “Organized Retail Crime: An Assessment of a Persistent and Growing Threat,” and was removed on November 29, citing an error by a researcher from K2 Integrity, a risk advisory services firm that contributed to the report.
The retraction affects many media stories covering the retail sector over the past year, including articles published in this magazine.
Despite the change, NRF says theft is still a serious problem for the industry, with internal and external theft accounting for nearly two-thirds (65%) of retailers’ shrink in 2022. Overall shrink rates also rose last year, climbing to 1.6% for a total value of $112.1 billion in losses, the group said in its “2023 National Retail Security Survey.”
“We stand behind the widely understood fact that organized retail crime is a serious problem impacting retailers of all sizes and communities across our nation,” NRF spokesperson Mary McGinty said in an email. “At the same time, we recognize the challenges the retail industry and law enforcement have with gathering and analyzing an accurate and agreed-upon set of data to measure the number of incidents in communities across the country. The reality is retailers and law enforcement agencies continue to experience daily incidents of theft, partner in large-scale investigations and report recoveries of stolen retail goods into the millions of dollars.”
