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Retail theft continues to rise despite recession easing
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Retail theft continues to rise despite recession easing

Despite increased security measures, retail theft remains a significant challenge for businesses, potentially cost the industry over $140 billion in 2025, according to recent estimates.

By 2026, researchers at Capital One estimated that losses could top $150 billion.

The bank has already estimated that retailers lost $121.6 billion to retail theft last year. That’s up from the $112.1 billion in lost gross revenue and $84.9 billion in fraudulent sales revenue they experienced in 2022, according to Capital One’s most recent data released at the end of October.

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David Johnston, vice president of asset protection and retail operations at the National Retail Federation (NRF), said there was a misconception that retail theft was down because executives cited a drop in revenue in recent calls . “Shrinkage” is an industry term that refers to the loss of inventory due to employee theft, shoplifting, administrative errors, or supplier fraud.

In particular, Target CFO Michael Fiddelke told analysts in August that the company posted “better-than-expected results in the latest store inventory counts” and “expects reduced costs to be about the same as last year.”

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Merchandise locked to prevent theft in Target store, Queens, New York. (Lindsey Nicholson/UCG/Universal Images Group via Getty Images/Getty Images)

That same month, Walmart CFO John Rainey said that “within the core product mix, we benefited a little bit from an improved discount in the quarter.”

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Johnston said discussions about shrink and those about shoplifting, organized retail crime and fraud are “two different conversations.”

Industry conversations reveal that “theft continues to affect retailers across all segments,” with shoplifting and violence concerns remaining “at high levels,” he added.

When CEOs and directors discuss churn, they’re referring to their resources and strategies to manage and reduce losses in all categories of churn, he said.

“You manage your shrinkage by controlling what you can control and reducing in areas where you can reduce losses,” Johnston said. “There are certain areas where you can do all of that. You may still have considerable losses.”

Ticker Security last Change Change %
TGT BODY TARGET 150.91 +3.62

+2.46%

WMT WALMART INC. 83.85 +0.41

+0.49%

Johnston also said the industry continues to experience significant increases in merchandise theft and e-commerce fraud, return fraud and cybercrime, all of which are linked to these organized retail crime groups and are not accounted for in the percentages of decrease

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In fact, Capital One estimated that 58% of organized retail crime is merchandise theft.

To combat this persistent problem and hold accountable those involved in the activities of organized retail crime, Johnston has repeatedly emphasized that there needs to be a community effort.

Ticker Security last Change Change %
COF CAPITAL ONE FINANCIAL CORP. 184.82 -6.15

-3.22%

First, retailers must continue to strengthen partnerships with law enforcement to incident reportingproviding detailed evidence and assisting them with investigative support. They can also help educate law enforcement about the tactics, methods and commonalities of how these criminals steal from their stores, Johnson said.

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A store in New York has installed locked boxes to cover candy that is frequently stolen. (Deb Cohn-Orbach/UCG/Universal Images Group via Getty Images/Getty Images)

He asks too law enforcement officers and prosecutors to further support retailers with investigative resources to link those who commit in-store crime to the leaders of these organized crime groups who often direct or purchase stolen goods.

Johnston said these individuals must be prosecuted, “as criminals profiting from theft, not just low-level criminals.”

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In the meantime, he said government officials at all levels must amend existing laws or create new laws that focus on prosecuting these criminal groups. They also need to give law enforcement and prosecutors the resources to set up task forces or properly investigate these larger organized crime groups, according to Johnston.

Johnston said the passage The Law on Combating Organized Retail Crime Last year’s Congress will provide state and local governments with federal resources to aid them in their efforts.

It’s still too hard to say how long things will be stuck, according to Johnson, who said it would depend on the individual retailer.

For now, “we will continue to see retailers using security measures” to protect their merchandise, employees and shoppers, he said.