No. of Recommendations: 15
The “shrink” problem at DG and similar stores may be significant, to be sure. And it’s entirely possible that part of the cause is undermanned stores and/or the clientele that frequents them. But…
The National Retail Federation, which would be in a position to know says:
“ Across American retailers, average shrink—the industry term for inventory lost for any reason, expressed as a percentage of total sales—has remained relatively steady at around 1.5% for years, according to the National Retail Federation, a trade group that’s long lobbied for a more robust law enforcement response to retail theft. But shrink accounts for many types of things, including paperwork and checkout errors, losses in transit, returns, spoilage and theft from employees or vendors.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%.
From the NRF report (
https://nrf.com/media-center/press-releases/shrink...):
As incidents of retail crime continue to escalate throughout the country, retailers have seen a dramatic jump in financial losses associated with theft. 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 2023 National Retail Security Survey released today by the National Retail Federation.
“Retailers are seeing unprecedented levels of theft coupled with rampant crime in their stores, and the situation is only becoming more dire," said NRF Vice President 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.”This supposedly small 1.5% problem is actually a pretty big percentage for many retailers with low margins, like DG. Walmart, for instance, has 2.4% margins after shrink, so I doubt they would think it is a minor problem. DG's 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, and retailers like Walmart and Target that are almost certainly better equipped to minimize shrink.
