Current Events > Study: retailers overstating the extent and impact of theft

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https://www.cnn.com/2023/10/27/business/crime-spree-retailers-are-actually-overstating-the-extent-of-theft-report-says/index.html

Retailers say theft is exploding, and some data from retailers along with numerous videos of violent store robberies and looting seem to support the claim.

But some retail analysts and researchers, bolstered by local crime statistics, say stores may be over-stating the extent and impact of theft. Why? Its a useful deflection, camouflaging weak demand, mismanagement and other issues denting business right now. And it forces lawmakers to respond.

Across the country, the actual increase in rates of theft at stores does not correspond to the increase in company commentary and actions on theft, according to a new report by retail analysts at William Blair. Retailers are increasingly vocal on the subject, in part to draw out government action, the analysts wrote.

To be sure, theft is impacting retailers much more than it was before the pandemic. Thats because theft has also gotten more visible and more violent, retailers say, and has put employee safety at risk in some cases.

But a host of other issues, from inflation to rising costs, are impacting retailers, too. Theft is just one of many structural issues chains are facing, most notably the shift to online shopping and over-expansion of brick-and-mortar retail.

Companies are also likely using the opportunity to draw attention away from lower profit margins due to higher promotions and poor inventory planning in recent quarters, William Blair retail analysts Dylan Carden and Phillip Blee said in a report this week. Many retailers misjudged how much merchandise they needed to carry and now have a glut.

The analysts noted that overall shrink merchandise losses due to external and internal theft, damaged products, inventory mismanagement and other errors makes up just 1.5% to 2% of retailers sales. That percentage has remained steady for years, despite retailers sounding the alarm more than ever about theft.

The National Retail Federation said that retailers losses, known as shrink, increased 19% last year to $112 billion, based on a survey of 177 retailers. But shrink as a percentage of sales fell during the height of the pandemic as stores temporarily closed and grew in 2022 as stores re-opened.

This hit to profits is relatively small and fleeting not reason enough alone to close stores according to the analysts. At nine major retailers that have increasingly cited the rising impact of theft, shrink as a percentage of sales increased just 0.4% in 2022, they found.
...
Alex Vitale, a professor of sociology at Brooklyn College who studies policing, said business leaders had turned retail theft into a moral panic to mobilize a stronger police and criminal justice response.

It shows us the way certain crimes in certain moments get mobilized far beyond their impact to play into a set of political and social debates, he said.
...
One analysis by journalist Judd Legum at Popular Information found that the stores Target is closing in both New York and San Francisco had lower reported theft rates compared to other nearby locations.

We believe companies like Target could indeed be using the current narrative around shrink to take broader action in lagging parts of their business, the William Blair analysts said. We have to acknowledge potentially ulterior, more opportunistic motives. Target could be using shrink to mask other issues, including poor inventory management, which came to a head in 2022 following supply chain disruption and is closing stores to boost overall margins.
Target has not shared data about those store closures directly. A Target spokesperson said that organized retail crime increased 50% in its stores since 2021. The company also said that theft incidents involving violence or threats had grown.

Other retailers strategies, such as self-checkout and low staffing levels, have also unintentionally made shrink worse. Costco management said this year that shrink increased in part we believe due to the rollout of self-checkout.

Five Below said that shrink at stores with more self-checkout lanes was higher. The company plans to increase the number of staffed cash registers in new stores.

Meanwhile, businesses are pushing for tougher criminal penalties on thieves and asking for police and prosecutors to crack down on theft.

They have called for local and state government to more aggressively prosecute organized retail crime, lower the dollar thresholds for theft to rise to a felony, and reverse policies to eliminate cash bail.

According to the Chamber of Commerce, 12 states have created new statutes, revised existing statutes, or created enhanced penalties for organized retail crime.

But its not clear that lowering the thresholds for felony theft is an effective deterrence.

In early research on the topic in 2017, Pew Charitable Trusts examined crime trends in 30 states that raised their felony theft thresholds between 2000 and 2012. Pew found that raising the threshold had no impact on overall property crime or larceny rates.

I imagine a lot of the responses ITT will sarcastically feign surprise, but it is important to have data and evidence behind even beliefs that seem straightforwardly obvious.

The rich love to blame minorities for every problem they face.

No really?! I am shocked!

https://gamefaqs.gamespot.com/boards/400-current-events/80605076

You mean every city and large businesses isn't a post-apocalyptic hellhole?

That can be true and retail theft can still be a problem.

Anyone who has worked in retail is unsurprised.

But confirmation is always nice.

Antifar posted...

Meanwhile, businesses are pushing for tougher criminal penalties on thieves and asking for police and prosecutors to crack down on theft.

They have called for local and state government to more aggressively prosecute organized retail crime, lower the dollar thresholds for theft to rise to a felony, and reverse policies to eliminate cash bail.

Who cares if they're overstating it? There SHOULD be harsher penalties.

Northlane posted...

Who cares if they're overstating it? There SHOULD be harsher penalties.

Harsher penalties do not work

Antifar posted...

In early research on the topic in 2017, Pew Charitable Trusts examined crime trends in 30 states that raised their felony theft thresholds between 2000 and 2012. Pew found that raising the threshold had no impact on overall property crime or larceny rates.

Are there any other lies you believe we should base ineffective policy on?

Northlane posted...

There SHOULD be harsher penalties for businesses who lie for self-gain.

Fixed.

whitelytning posted...

That can be true and retail theft can still be a problem.

this is already stated in the OP.

Umbreon posted...

Anyone who has worked in retail is unsurprised.

But confirmation is always nice.

Seems like you never worked retail before.

hockeybub89 posted...

You mean every city and large businesses isn't a post-apocalyptic hellhole?

No that would mean Fox News would be lying to it's viewers.

Antifar posted...

Harsher penalties do not work

Are there any other lies you believe we should base ineffective policy on?

Punishing organized retail theft should be done though. Don't need to bring harsher penalties to it, just enforce the current penalties. It's just bad socially to have visible organized theft

You mean the television lied to us?

das crazy

Forty_Niners posted...

The rich love to blame minorities for every problem they face.

How tf did you get that from the article?

Companies are also likely using the opportunity to draw attention away from lower profit margins due to higher promotions and poor inventory planning in recent quarters

I work retail and at least from my end of things I can agree with this. Head office has been dumping ridiculous amounts of freight at us of late which will take weeks to sell through. I expect to have to throw out a lot of expired food in a couple weeks.

To surprise of only the gullible

emblem-man posted...

Punishing organized retail theft should be done though. Don't need to bring harsher penalties to it, just enforce the current penalties. It's just bad socially to have visible organized theft

These extent to which these things are "organized" is also exaggerated by retailers. This podcast goes into the ways these claims have been manufactured out of really shoddy data and plain old bullshit
https://podcasts.apple.com/us/podcast/the-organized-retail-crime-panic-teaser/id1651876897?i=1000632676408

Baha05 posted...

Seems like you never worked retail before.

I literally have though.

Do they not insure their merchandise against theft?

Antifar posted...

These extent to which these things are "organized" is also exaggerated by retailers. This podcast goes into the ways these claims have been manufactured out of really shoddy data and plain old bullshit
https://podcasts.apple.com/us/podcast/the-organized-retail-crime-panic-teaser/id1651876897?i=1000632676408

I've had that episode in my queue the past few days, I'll have to get around to it soon.

Antifar posted...

The National Retail Federation said that retailers losses, known as shrink, increased 19% last year to $112 billion, based on a survey of 177 retailers.

And just to be sure. The point is that theft shouldn't be viewed as the reason stores are closing down, because the shrinkage as percentage of sales is low.

But theft has increased, correct?
The distinction is important, and I'm not trying to downplay the moral panic of using it as an excuse to shutter stores.
But more just trying to say that, theft is an issue regardless of if it causes the store to shutdown or not.

Obviously. They've hit on the same thing Fox News has. The public is dumb and will believe anything talking heads say

CEOs are the real thieves and of course they place all the blame on the ordinary folk

emblem-man posted...

But theft has increased, correct?

No, not really
https://www.cnbc.com/amp/2023/09/26/organized-retail-crime-and-theft-not-increasing-much-nrf-study-finds.html

External theft, which includes organized retail crime, was again reported as the largest source of shrink last year at 36.15%, but that was slightly below 37% in 2021. Internal theft, or goods stolen by employees, rose slightly to 28.85% from 28.5% in 2021. Process and control failures and errors made up 27.29% of shrink in 2022, up from 25.7% the year prior.
...
Retail shrink climbed in absolute dollars, but when reported as a percentage of sales as is commonly done, average annual shrink increased to 1.57%, up from 1.44% in 2021. The share is largely in line with past years. Average annual shrink was 1.62% of sales before the pandemic in 2019, though it was as low as 1.33% in 2017, according to previous surveys.

But Target is still hiring heroes, part-time.
I've seen it here.

Individually for most stores their profit margins arent that high actually. If I recall its in the low single digits on average. So even a small uptick in crime could have a significant impact on profits.

Low demand in all the major citys their shutting down also makes no sense. Maybe for smaller citys but places like Seattle, New York, or San Francisco?