NRF: Retail shrink inches up 1.6%; ORC-related violence increases

With retail crime continuing to escalate throughout the country, more retailers are enforcing a “hands off” approach in the apprehension of shoplifters.

That’s one of the findings of the National Retail Federation’s “2023 National Retail Security Survey,” which found that, when taken as a percentage of total retail sales in 2022, shrink accounted for $112.1 billion in losses, up from $93.9 billion* in 2021.

According to the survey, the average shrink rate in fiscal 2022 increased to 1.6%, up from 1.4% the previous year. On par with previous years, internal/employee theft (28.85%)  and external theft (36.15%), which includes organized retail crime, accounted for nearly two-thirds (65%) of retailers’ shrink. Process/control errors accounted for 27.29% of shrink.

The number of survey respondents who said that no employees are authorized to stop or apprehend shoplifters rose to 41% this year, up from 38% last year.

As retailers continue to enhance their loss prevention and asset protection measures, some are taking more drastic action. Retailers reported being forced to close a specific store location (28%), reduce operating hours (45%) or reduce or alter in-store product selection (30%) as a direct result of retail crime.

Retailers reported that organized retail crime (ORC) remains a significant concern due to heightened levels of violence. More than two-thirds (67%) of respondents said they were seeing even more violence and aggression from ORC perpetrators compared with a year ago.

More survey respondents said that no employees are authorized to stop or apprehend shoplifters (41%), compared with 38% last year.

“Retailers are seeing unprecedented levels of theft coupled with rampant crime in their stores, and the situation is only becoming more dire," said NRF VP for asset protection and retail operations David Johnston. “Far beyond the financial impact of these crimes, the violence and concerns over safety continue to be the priority for all retailers, regardless of size or category.”

Seventy-eight percent  of the retailers that responded to the survey do not include e-commerce in their shrink calculation and 57% don’t include supply chain losses, the report said.

ORC

The types of products shoplifters are targeting may not be based solely on price point. While ORC groups have traditionally targeted specific items or types of goods, that list has expanded to new categories like outerwear, batteries, energy drinks, designer footwear and kitchen accessories.

The top five cities/metropolitan areas affected by ORC in the past year were Los Angeles, San Francisco/Oakland, Houston, New York and Seattle.

As retail crime continues to evolve in scope and sophistication, so are retailers’ prevention efforts. When asked about resource allocation to address today’s risks, 34% have increased internal payroll to support their risks, while 46% have increased the use of third-party security personnel.

 Over half (53%) have increased their technology and software solution budgets in the past year. With violence being one of the most concerning risks, 54% have increased or are increasing employee workplace violence training.

“Retailers are piloting and implementing a number of loss prevention practices to deter, prevent and mitigate these substantial losses,” said Read Hayes, University of Florida research scientist and Loss Prevention Research Council director. “In addition to enhancing traditional security measures, many are also allocating resources to innovative emerging technologies for future prevention.”    

Policy reform is another critical component of the retail industry’s efforts to combat ORC. Initiatives such as raising the felony theft threshold – the amount that must be stolen in order to be considered a felony – or removing or eliminating cash bail may have unintended consequences for retail theft. 

Nearly three-quarters (72%) of respondents reported they have seen an increase in the average value per incident in localities that raised their minimum felony thresholds, while another 67% reported an increase in repeat offenders in areas associated with initiatives to reduce or eliminate cash bail. Nearly all (93%) are in support of federal ORC legislation.

The 2023 National Retail Security Survey was conducted online among senior loss prevention and security executives in the retail industry. This year’s results contain insights from 177 retail brands, which accounted for $1.6 trillion of annual retail sales in 2022, and represent more than 97,000 retail locations across the United States. The study was done in partnership with the Loss Prevention Research Council and is sponsored by Appriss Retail. Click here to view the report.

*The 2021 figures have been updated to reflect the April 2023 U.S. Census Bureau’s revisions to retail sales.