US retailers lose billions to shoplifting

Retailer Target recently announced during its first quarter financial report that this year's profitability will be reduced by $500 million more than last year from shrink — an industry term for losses from shoplifting by customers, employees and organized crime groups.

In 2022, Target lost $800 million from inventory shrink. That means Target is expected to take a $1.3 billion loss from inventory shrink for 2023.

"As we look ahead, we now expect shrink will reduce this year's profitability by more than $500 million compared with last year. While there are many potential sources of inventory shrink, theft and organized retail crime are increasingly important drivers of the issue," said Target Chairman and CEO Brian Cornell.

Walmart US CEO John Furner said in a recent financial report that shrink "has been really challenging "for the entire retail industry.

Mary Dillon, CEO of shoe retailer Foot Locker, said shrink is "having an increased impact on Foot Locker".

Other retailers and dollar stores said shrink had cut their gross margins by several basis points in the first quarter, the Financial Times reported.

Shoplifting declined during the COVID-19 pandemic but is going up again. According to a 2022 retail security survey by the National Retail Federation, US retailers lost $94.5 billion in 2021, accounting for 1.4 percent of total revenue. More than 85 percent of respondents cited shrink as a real problem.

'Higher loss'

"Based on what we're hearing already from many of these CEOs and based on what we're experiencing daily in retailers across the nation, I do foresee us to have a much higher loss in 2023," David Johnston, NRF vice-president of asset protection and retail operations, recently told FOX Business.

Johnson said the issue is a challenge for customers and employees, and the shrink increase is especially driven up by the rise of activities of organized retail crime, or ORC.

ORC increased by 26.5 percent in 2021. As a result, many retailers are boosting their budgets for loss prevention and technology, and 52.4 percent of respondents in the NRF survey said they are increasing budgets specifically for capital and equipment.

According to the Retail Industry Leaders Association, retailers face increased costs for lost products, security and labor due to ORC. The result is $125.7 billion in lost economic activity and 658,375 fewer jobs.

Shoplifting is more serious at some drugstores in major cities like San Francisco and New York where many daily items like shampoos and razor blades are locked in cases.

Retail thefts hit a record level for the second year in a row in 2022 in the city, the New York Post reported. According to police data, the number of shoplifting complaints surged to more than 63,000 in 2022 — a 45 percent jump over 2021.

Agencies contributed to this story.