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After conducting annual research on shrink for more than three decades, the National Retail Federation won’t release a report on the issue this year.
“Over the last several years, as the nature of retail loss has evolved, it has become clear that a broad study about retail shrink is no longer sufficient for capturing the key challenges and needs of the industry,” Mary McGinty, NRF vice president of communications and public affairs, said by email. “We will be releasing a new report later this year that examines the landscape of retail theft and violence, which are key challenges for the industry.”
The latest available statistics on shrink in the industry can be found in last year’s National Retail Security Survey, as it’s formally known, McGinty said. That was the group’s 32nd report on shrink, reflecting numbers from 2022.
The decision came out of NRF’s ongoing practice of reevaluating “the methods and tools we use for capturing key trends that impact businesses and consumers to ensure that we are providing the most accurate and actionable information possible,” she said. “At times, this means that we make necessary changes to long-standing studies or benchmarks in order to ensure that they reflect the needs and drivers of the modern retail industry.”
Shrink has been in particular focus in recent years, however, with retailers including Target, Five Below, Dick’s Sporting Goods and Walgreens calling out the problem in earnings reports, though early this year some also reported improvements. The NRF has long found a surprising consistency with 2022’s levels of shrink and theft relatively flat to 2021, in a pattern seen across several years.
Employee theft and process errors are major worries for retailers, accounting for nearly two-thirds of total inventory loss.
The top reasons for shrink in 2022, according to the National Retail Federation
According to the most recent survey, 63% of lost inventory has internal causes, with 36% from external theft, including shoplifting, credit card fraud, organized retail crime, cargo theft and other retail crimes committed by nonemployees. Several retailers have kept the focus on crime, not just because of inventory losses but also out of concern for store workers and customers. In 2022, 65% of shrink was due to all sorts of theft, including all types of external theft as well as theft by employees, per NRF’s most recent report.
Numbers on retail crime have been difficult to come by, with confusion around statistics and terminology and a dearth of reliable data. Last year, after a Retail Dive analysis revealed an error in a special NRF crime report, the group retracted a key statistic.
In addition to releasing new statistics on retail crime later this year, the NRF is holding a “Fight Retail Crime Day” later this month, in order to pressure Congressional lawmakers to pass legislation that addresses the issue. Late last year, a member of a U.S. House of Representatives committee that took up the bill urged the group to provide better data.
Trevor Wagener, director of the research center and chief economist at the Computer & Communications Industry Association, said the information has been useful to many over the years, and not just retailers.
"The inventory shrink figures from the NRF's NRSS are valuable benchmarks for researchers, policymakers, and industry,” he said by email. “Hopefully they will be published again in the future."
But Brand Elverston, who has been working in retail asset protection for more than two decades, including at major retailers, said the reports have been of limited value over the years because much of their information was open to doubt. Although the surveys were anonymous, for example, some major retailers would skip questions about shrink levels because those numbers aren’t public information.
Moreover, when it comes to the reasons behind inventory loss, most retailers have even less visibility, he said.
“It's impossible for retailers to have sales data-like accuracy in the shrink arena, because by definition, it's ambiguous,” he said by phone. “It's estimations, depending on the sophistication of their system. And to say, over 30 years, 70 cents of every shrink dollar is theft — it became, in my mind, repetitious and a bit unrevealing. That's an inaccurate and a heavily biased assumption, because no retailer truly has item-level financial shrink to understand thoroughly what the sources and contributions are in each of those elements on the pie chart.”
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Daphne Howland, Khareem Sudlow
