Retail theft hasn’t been a stranger to the news cycle, as big-name brands have publicly admitted to having big problems with crime — and have been taking motion to deal with the problems over the past 12 months.
However, a recent report by retail analysts at William Blair suggests that the documented theft rates at stores don’t align with the “increase” in company commentary on the difficulty, and the size and impact of theft is likely to be exaggerated, masking underlying business issues similar to weak consumer demand and mismanagement.
The report also found a mere 0.4% increase in shrink, or retail losses, as a percentage of sales in nine major retailers that cited a growing impact of theft in 2022.
“We imagine corporations like Target could indeed be using the present narrative around shrink to take broader motion in lagging parts of their business,” the William Blair analysts said within the report. “We need to acknowledge potentially ulterior, more opportunistic motives.”
However, shrink is a difficulty, and in response to a National Retail Federation survey of 177 retailers, shrink increased by 19% last 12 months to $112 billion, up from $93.9 billion in 2021 — meaning that even when retailers are exaggerating, it’s still a difficulty that they’re grappling with.
Related: Costco Isn’t Facing Devastating Surges in Theft Like Target and Walmart — and the Reason Is Very Simple
The analysts highlight that overall merchandise loss, encompassing external and internal theft, damaged goods, and inventory mismanagement, constitutes just one.5% to 2% of outlets’ sales — a percentage that has remained relatively stable over time despite retailers increasingly sounding the alarm about theft.
Although elevated levels of shrink are expected through 2024, the extra impact is predicted to be somewhat “more contained” as in comparison with previous years, pointing to early signs of stability in shrink levels observed in 2023 and signs that recent measures, similar to closures, might need been “overexaggerated.”
Related: ‘Increasingly Serious’ Retail Crime Is Hitting Another Beloved U.S. Retailer Hard — and Its CEO Reveals a Bleak Trajectory
The analysts at William Blair state within the report that certainly one of the explanations they imagine retailers could also be inflating a theft narrative is to “stimulate” government motion, “provided that there’s little they’ll do on their very own” — adding that actions inside a retailer’s control to combat theft (putting items behind locked cases, price hikes, and cutting back on self-checkout options), can negatively impact engagement, sales, and productivity.
“This leaves government motion as one of the best possible solution,” the analysts wrote.
Some retailers have already taken to local government intervention as a method to curtail shrink. In September, Walmart announced it could be reopening certainly one of its formerly closed stores in Atlanta with a built-in police station to combat crime and increase security.
Related: Walmart Takes Bold Step to Combat Rising Crime in Retail with In-House Police Station
