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No, “practically half” of $94.5 billion in retail stock losses in 2021 was not “attributable to organized retail crime.”
That line is simply one other in a protracted sequence of falsehoods put forth by the skilled bullshitters on the Nationwide Retail Federation.
Right here’s Reuters:
“The primary lobbying group for U.S. retailers retracted its declare that “organized retail crime” accounted for practically half of all stock losses in 2021 after discovering that incorrect knowledge was used for its evaluation.”
I’ve been calling out their nonsense for practically twenty years and was able to retire my Black Friday debunking of their annual Thanksgiving silliness. I tracked the annual retail gross sales forecast as a twofold train: Keep away from forecasts, as they’re principally fallacious, and have a tendency to lose buyers’ cash. And second, be cautious of what self-interested commerce teams say about their business; they’re lobbyists and cheerleaders, not seekers of reality.1
However since a spokesperson for the NRF admitted they needed to take away content material from its report on organized retail crime (report from April 2023, produced with employed gun K2 Integrity), I’ve begun to rethink that.
After six months of relentless propaganda on crime, the NRF needed to edit the declare that “practically half” of stock losses had been organized crime.
It’s not.
The precise quantity? About 5%, or 1/10 as a lot.
The straightforward math downside appears to have been exascerbated by Capital One, which handled ALL SHRINKAGE as retail theft. As Retail Dive reported, the statistic comes from a Capital One Procuring report on retail theft, which treats the NRF’s whole shrink quantity as theft, then extrapolated the numbers by state.2
You may depend on C-Suite executives at publicly traded firms to leap on each pattern to excuse poor firm efficiency. Early this yr, Walgreens finance chief James Kehoe admitted as a lot: “Perhaps we cried an excessive amount of final yr” about merchandise losses. Up to now, firms have referenced COVID-19, crypto, inflation, battle, and even AI exhibits in quarterly calls as a part of their “contextualizing” income and revenue patterns.
There are various sources of “Shrinkage” of stock, and whereas there’s some debate as to the most important sources, they give the impression of being one thing like this:
Worker theft: It’s the primary supply of shrinkage. (My expertise: it’s typically uinderreported by firms). Issues “fall off” the truck, Workers steal merchandise, or resell it and hold the money. This prices retailers wherever between $15-20 billion yearly within the US.
Shoplifting: $10-15 billion per yr. Whether or not its merely strolling out with items, doing smash & grabs or in any other case dishonest self-checkouts, it’s the second largest supply of retail theft, and a pernicious problem to all retailers.
Return fraud: Returning stolen merchandise is a variation of shoplifting; notice it typically (ceaselessly?) includes cooperative workers.
Credit score Card Fraud: Has been an enormous supply of losses; a few of it’s borne by banks, and greater than a bit of it impacts shoppers, who typically are unaware of it.
Vendor Fraud: Mild shipments and different types of stock shrink earlier than items even arrive at retailers or their warehouses account for $2-4 billion in losses
Administrative errors: Typically these are legit errors in ordering,. Logistics, and stock monitoring.
Operational loss, or unintentional loss: Any firm that buys, ships, warehouses and shows hundreds of thousands of products a yr goes to sometimes break, harm or misplace them. Its regular, and a part of any retail enterprise.
Accounting Fraud: Not each retailer is Loopy Eddies, cooking the books, however quite a lot of shops have been identified to get inventive with their stock administration.
The declare that organized retail crime accounted for “practically half” of stock losses was false, however it’s additionally an indictment of recent media. All too typically, the reality issues a lot lower than meme manufacturing and clickbait.
Who has time to truly fact-check information when one thing this juicy comes alongside? That it was clearly false and based mostly on outdated lobbyists’ studies by no means appeared to boost any pink flags.3
The LA Occasions referred to as out how foolish a number of the claims had been in late 2021:
“It’s simple to get consideration for sensational claims, nevertheless, significantly once they come from official sources. Rachel Michelin, president of the California Retailers Assn., advised the San Jose Mercury Information that in San Francisco and Oakland alone, companies lose $3.6 billion to organized retail crime annually.
That may imply retail gangs steal practically 25% of whole gross sales in San Francisco and Oakland mixed, which amounted to round $15.5 billion in 2019, in line with the state company that tracks gross sales tax.
Can that be proper? In a phrase: no.”
And in line with NRF knowledge itself, from its annual Retail Safety Survey, shrink attributed to exterior theft, together with organized retail crime, has largely remained the identical since 2015. On-line dasher lately reported that “The typical retail shrinkage charge has hovered round 1.4% for over a decade.” In 2022, Retail’s shrink charge rose to 1.6% from 1.4% of gross sales in 2021, in line with the NRF’s annual retail safety survey; 1.6% was the place the reported shrink charge was in 2019 and 2020 additionally:
Supply: Retail Dive
An enormous media scare was created by those that couldn’t be bothered to test the info, however forth by a slipshod, biased commerce group with a historical past of nice exaggeration or outright mendacity, to cheerlead the pursuits of its personal business.
Traders ought to look askance at knowledge and claims from business spokespeople and commerce teams. All of them have agendas, none of which embody the well-being of your portfolios…
Supply:Retailers have a criminal offense downside. It’s within the numbers.The difficulty is complicated and infrequently clouded by imprecise knowledge. Typically from the business itself.Retail Dive, Nov. 29, 2023
See additionally:US retail lobbyists retract key declare on ‘organized’ retail crimeBy Katherine MastersReuters, December 5, 2023
‘Perhaps we cried an excessive amount of’ over shoplifting, Walgreens govt saysBy Nathaniel MeyersohnCNN January 7, 2023
Retailers say thefts are at disaster stage. The numbers say otherwiseBy Sam DeanLA Occasions, December 15, 2021
Companies hold complaining about shoplifting, however wage theft is a much bigger crimeMichael HiltzikLA Occasions, August 30, 2023
Retail Group Retracts Startling Declare About ‘Organized’ ShopliftingBy Eduardo MedinaNY Occasions, December. 8, 2023
Organized journalistic crimeJUDD LEGUM AND TESNIM ZEKERIAPopular.information, Dec 11, 2023
Beforehand:Black Friday Survey #Fails
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1: See additionally, The Nationwide Affiliation of Realtors.
2. We had a Capital One bank card ~20 years in the past however canceled it once they refused to decrease charges from 18% in 2007 to what they had been continually promoting on TV. (They had been very disagreeable to cope with). I’m not remotely shocked that fundamental arithmetic is difficult for this firm.
3. Extra Reuters:
In line with NRF spokesperson Danielle Inman, the declare that organized crime accounted for practically half of all stock losses was based mostly on two-year-old testimony from Ben Dugan, former president of the advocacy group Coalition of Legislation Enforcement and Retail. In 2021, he advised a U.S. Senate committee that organized retail crime accounted for $45 billion in annual losses for retailers, in line with estimates by the coalition.
The inclusion of the declare in NRF’s report was “taken immediately from Ben’s testimony” and “was an inference made by the K2 analyst linking the outcomes of the NRF survey from 2021 and Ben Dugan’s assertion made that very same yr,” Inman mentioned.
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