Retail group withdraws surprising claim about ‘organized’ shoplifting

A national advocacy group has retracted its startling estimate that “organized retail crime” was responsible for nearly half of the $94.5 billion in missing store merchandise in 2021, a figure that helped amplify claims that the United States was experiencing a nationwide surge in shoplifting.

The group, the National Retail Federation, edited that claim last week from a widely cited report released in April, after the trade publication. Retail Diving revealed that faulty data was used to arrive at an inaccurate figure.

The retraction comes as retail chains like Target continue to claim they are victims of massive shoplifting operations that have cut into their profits, forcing them to close stores or inconvenience customers by locking products.

These claims have been fueled by widely shared videos of some cases of brazen shoplifting, including footage of masked groups smashing windows and grabbing high-end handbags and cellphones. But the data shows that this impression of endemic crime was only a mirage.

In fact, retail thefts have been lower this year in most of the country than a few years ago, according to police data. Some exceptions, notably New York City, exist. But in most major cities, shoplifting has decreased by 7% since 2019.

Organized retail crime, in which multiple individuals steal products from multiple stores and then resell them on the black market, is a real phenomenon, said Trevor Wagener, chief economist for the Computer & Communications Industry Association, who conducted research on retail data. But he said organized groups were likely responsible for about 5% of store merchandise gone missing between 2016 and 2020.

He noted that there is “a lot of uncertainty and imprecision” in measuring losses because it is difficult to distinguish what constitutes shoplifting and what constitutes organized crime.

Mr. Wagener testified to Congress in June on the discrepancy in the National Retail Federation report.

Although it retracted that figure and revised the report, the federation, which has more than 17,000 member companies, insisted in an emailed statement that it was focusing on the problem appropriately.

“We support the widely recognized fact that organized retail crime is a serious problem that affects retailers of all sizes and all communities across our country,” the statement said. “At the same time, we recognize the challenges faced by the retail sector and law enforcement in collecting and analyzing an accurate, agreed-upon data set. »

The problem is “total annual shrinkage” – the industry term for the value of merchandise that disappears from stores without being paid for, due to theft, damage and inventory tracking errors.

Mary McGinty, a representative for the federation, said the error was caused by an analyst at K2 Integrity, a consulting firm that helped produce the report.

The analyst, who was not named, linked a 2021 National Retail Federation investigation to a quote from Ben Dugan, the former president of the advocacy group Coalition of Law Enforcement and Retail, who said during Senate testimony in 2021 that organized retail crime accounts for “$45 billion in annual losses for retailers.”

Dugan cited the federation’s 2016 National Retail Safety Survey, which actually referred to the overall cost of shrink in 2015 – not the amount lost solely to organized retail crime. detail, Ms. McGinty said.

Alec Karakatsanis, a civil rights lawyer who has studied and criticized the media’s coverage of organized retail crime, said the retraction highlights how some news organizations, which have largely covered the issue of shoplifting, were “used as a tool by certain special interests”. creating a lot of fear about this issue, when in fact it was clear from the beginning that the facts did not add up.”

One of the most striking examples came in October 2021, when Walgreens announced the closure of five stores in San Francisco, citing repeated cases of organized shoplifting. The company’s decision came months after a video viewed millions of times showed a man, trash bag in hand, openly stealing products from a Walgreens while others watched.

But an October 2021 analysis carried out by The Chronicle of San Francisco showed that police department data on shoplifting did not support Walgreen’s explanation for the store closings.

Ultimately, Walgreens withdrew its claims. In January, a company executive said Walgreens may have overestimated the effects on its business, saying, “Maybe we cried too much last year.”

Mr. Karakatsanis said the exaggerated narrative of widespread shoplifting had been exploited by the retail industry, which was pressuring Congress to pass bills that would regulate retailers in line, where, according to them, a large part of the stolen products end up.

Commentators and politicians have taken up the issue. Earlier this year, Gov. Gavin Newsom, Democrat of California, responds to reports of large-scale thefts in the state by calling for tough prosecution of shoplifters And to plan investing millions of dollars to combat “organized retail theft.” Governor. Ron DeSantis, Republican of Florida, signed a bill last year targeting retail product theft, and former President Donald J. Trump called for violence, telling California Republican activists this year that police should shooting shoplifters as they leave a store.

Mr. Wagener, chief economist of the Computer & Communications Industry Association, said the National Retail Federation’s April report immediately struck him as flawed. The error is troubling, he said, because the federation has long been considered a trusted data provider for the industry.

What made the federation’s error even more surprising, Mr. Wagener said, was the stark contrast between that figure and the group’s previous findings.

In 2020, the federation declared in a report that organized retail crime cost retailers an average of $719,548 per $1 billion in sales – a figure that is nowhere near the 50% predicted in the April report.

Another survey from the National Retail Federation showed that all external thefts – including thefts not linked to organized retail crime – accounted for 37 percent of shrinkage, a figure that would still be billions of dollars less than the incorrect estimate of 50 percent made in April.

“It would be a bit like the census says almost half of the U.S. population lives in the state of Rhode Island,” Mr. Wagener said.