Subject: Re: So 9 years later
Perhaps better to use the NRF's actual report, which shows a small increase in shrinkage last year (1.4% to 1.6%), rather than a second-hand article about that report that says that the number is 'relatively steady' at 1.5%.

Well, not to get too far into the weeds on this here on the Berkshire board (but I guess I am, aren’t I?), but the report is from 2022, right after what some call “the great shoplifting freak out” of 2021. A couple of things:

The data is suspect from the start. It represents replies from a mere 175 participants out of 16,000 members and 97,000 retail outlets in the country, and would - like other non—stratified non-randomized surveys - be susceptible to participant bias: that is, stores that think they’re getting shoplifted are more likely to respond than those which aren’t.

Second, the data was wrong, anyway, as even NRF admitted later:

Retail lobby group’s retraction of key crime claim shows how hard it is to track theft

The leading retail lobbying group has walked back a key claim about shrink, or inventory losses from various sources, after a news investigation revealed that the analysis was incorrect.

The Friday retraction from the National Retail Federation underscores just how difficult it is for the industry to accurately measure the impact and source of inventory losses, even as it uses that data to lobby lawmakers to pass stricter laws that crack down on theft.
https://www.cnbc.com/2023/12/0...

Adding to the fire, even some CEOs who blamed poor results on “theft” have walked back their claims:

Maybe we cried too much’ over shoplifting, Walgreens executive says

Maybe we cried too much last year” about merchandise losses, Walgreens finance chief James Kehoe acknowledged Thursday on an earnings call. The company’s rate of shrink — merchandise losses due to theft, fraud, damages, mis-scanned items and other errors — fell from 3.5% of total sales last year to around 2.5% during its latest quarter.
https://www.cnn.com/2023/01/06...

DGs margins were 4.3% last year, a bit better, but then shrinkage is likely to be much higher than the industry average, which includes retailers like Costco and Apple that probably have minimal levels of shrink, ad retailers like Walmart and Target that are almost certainly better equipped to minimize shrink.

No doubt. But 2/3 of shrink is found in the storeroom and goods transport and fraudulent returns and such, not on the retail shelves, and all of those mentioned (Costco, Apple, WalMart, Target, etc.) are big enough to have people “watching” at the checkout. (Not at the shelf, typically). DG went so far as to have no one at the shelves, but also no one at the checkout, a recipe for fraud, no? That is fairly easily corrected, and if the 1/3 of the problem is so large, then some additional salary (and less capital for self checkout) would seem to be in order.

It’s worth noting that shrink *always* goes up during recessions or economic stress periods. I would think the high inflation/pandemic/shutdown would qualify, although there’s not a big history to draw from to support the conclusion.

Chart:
Inventory loss from theft and operational or other errors, known as “shrink,” has fluctuated little in 7 years
https://www.retaildive.com/new...

Finally, I’ll just leave with this. Target complained about shoplifting to the point of closing stores around San Francisco. And now they’re opening new stores —- wait for it — mere blocks away from the old ones. Maybe it wasn’t really the shoplifting, but poor execution, store design, or all the other factors that went into the Annual Report Excuse Random Generator?

However, it’s not clear the numbers add up.

For example, data released by the San Francisco Police Department does not support the explanation Walgreens gave that it was closing five stores because of organized retail theft, the San Francisco Chronicle reported in 2021.

One of the shuttered stores that closed had only seven reported shoplifting incidents in 2021 and a total of 23 since 2018, according to the newspaper. Overall, the five stores that closed had fewer than two recorded shoplifting incidents a month on average since 2018.

Similarly, a 2021 Los Angeles Times analysis of figures released by industry groups on losses due to organized retail crime found “there is reason to doubt the problem is anywhere near as large or widespread as they say.”