Is the Shoplifting Epidemic Fake Bad News? Yes and No

Image Credit: Rachael Ludwick via Flickr | CC BY SA 2.0

As someone who has spent time researching population economics, I’m no stranger to false bad news. It’s no secret that doom-and-gloom headlines sell better than “everything is fine.”

So over the last few months seeing viral video after viral video of shoplifting going unpunished I finally had to ask, is the shoplifting problem really worse? It turns out, the supposed shoplifting epidemic is much less clear than headlines would have you believe.

To discuss shoplifting we have to acknowledge that getting precise stats is going to be difficult. There are all sorts of reasons inventory can go missing. Inventory mismanagement can cause something to be misplaced, vendors or company paperwork can misreport delivery data, internal employee theft accounts for another portion of missing inventory, and, finally, shoplifting makes up the remaining portion of missing inventory.

However, if shoplifting is increasing at a dramatic rate, we would expect more inventory to go missing year over year. The rate that inventory goes missing in retail is referred to as “inventory shrinkage.”

Since population and the retail industry are growing in nominal terms, it would be at least somewhat misleading to look at the raw amount of merchandise stolen in dollar terms. Instead, we can take the dollars of inventory shrinkage and divide by total sales to see what percent of total revenues are eaten up by inventory shrinkage.

The results were pretty surprising. I looked at data from the National Retail Security Survey and found shrinkage rates to be up slightly the past few years, but not even at their highest points since the 1990s or 2000s.

Source: National Retail Security Survey

So let’s get one thing out of the way—shrinkage rates were high for recent history in 2019, 2020, and 2022. These numbers may seem small, but it’s important to give the dollars and cents for context. In 2021, a better year for shrinkage, the National Retail Federation estimated losses of about $93.9 billion. In 2022, the loss is estimated to have increased to $112.1 billion. So an increase from 1.4% to 1.6% represents a loss of a little less than $20 billion for the industry as a whole.

Granted, this is still a relatively small part of the estimated $7 trillion in sales the retail industry did in 2022. It’s important to note these incidents are relatively small amounts of a massive industry, but the increase is not nonexistent.

So in dollar terms shoplifting is at its highest levels in recent history, but as a percent of sales, the 1.6% rate is a little above recent history but still below early 2000s and 1990s numbers. Compared to the 1990s, today is a golden age for retail shrinkage. Weirdly, though, my suspicion is that if you asked people which year was worse for shoplifting—2000 or 2021—most people would respond with 2021 without question.

In reality, though, shrinkage was lower that year as a percent of sales. The estimated percent of the shrinkage from shoplifting has barely changed over those years from 32% in 2001 to 36% in 2022. In short, shoplifting as a percent of sales is down from 2001 based on available estimates. So why is our current perception of the situation so negative?

Why We Perceive an Epidemic

I think the perception of the increased problem of shoplifting is based partly on falsehood and partly on reality. Let’s consider the fake news aspect first.

There have been changes since 2000 that may cause people to overestimate the severity of the problem. Technology is one of the biggest reasons.

Shoplifting stories are more salient today because of smartphones. Everyone carries an HD camera in their pocket now. Think about it: what have been the most prevalent shoplifting stories you’ve seen in the last few months? Have they been tweeted videos of someone brazenly shopping in broad daylight? Those are the stories I’m seeing.

In 2000, if you saw someone shoplift, there wouldn’t be a video for millions of people to see. At most, it would probably turn up on local news. The increased prevalence of video and sharing technology likely are part of the reason for the pessimistic sentiment.

Another technological change is that it’s now cheaper for stores to police particular items. A lot of the angst over shoplifting I see stems from more products being locked behind glass doors or strapped to alarms. While I dislike that we live in a society where theft requires these measures by retailers, these aren’t obviously the result of increased theft alone.

As technology advances, monitoring devices like alarms and locks become cheaper. Just like the decreased cost of security such as Ring doorbells means homeowners will buy more security, lower costs for retailers means more security.

Another reason we may be hearing more about shoplifting is retailers now have competition from companies for whom shoplifting is a much smaller issue. Amazon, though it still has to deal with internal theft and porch pirates, has to spend a lot fewer resources dealing with theft since they don’t leave their inventory out in the open for shoppers. As online competition against retailers heats up, we’d expect traditional retailers to clamor more for government resources to go toward anti-shoplifting measures to protect against competitors who don’t have to deal with that problem.

So those are some reasons why the doom and gloom associated with shoplifting is probably a bit overhyped. But there are reasons why it could legitimately be seen as an issue. First off, dollar levels of shoplifting have increased, and the rate for the last few years has tended to be higher than the rate throughout the 2010s. That isn’t all, though.

A recent CNBC story highlighted that some companies are faring worse than others. In particular, Lowe’s shrinkage rate has steadily been increasing for a decade (with few exceptions), and the rate has now doubled from half a percent to a full percentage point. So the problem is worse for some retailers than others. Similarly, retailers in some cities may be dealing with increasing problems which are offset by decreasing problems in other areas.

Secondly, the National Retail Federation highlights two problems which I think together give reasonable cause for concern for the future. First, there seems to be an uptick in organized “smash-and-grab” incidents where large groups of people coordinate to steal from a store en masse. Granted, data on whether this method has increased is hard to come by, and, again, smartphones may bias us into thinking this is relatively more common than it used to be. The National Retail Federation report for 2023 claims an uptick in these types of incidents, but I’m unable to find any data showing this trend since the 2000s let alone the 1990s.

The second problem is the growing tendency for retailers to disallow the apprehension of shoplifters caught in the act. In 2022 the National Retail Federation reported that in 37.9% of stores, no employees are authorized to apprehend shoplifters. In 2023, that number increased to 41.4%. This survey question was only added recently, so it’s hard to compare to prior decades, but additional information from the Jack L. Hayes International’s 35th Annual Retail Theft Survey may shed more light.

The survey found across more than 22,000 stores total shoplifting apprehensions were around 300,000 in 2022. This is less than half of the 626,000 I found cited for the 2007 report according to Security Info Watch. It’s impossible to say what how much of the drop in apprehensions is caused by unwillingness versus the increased ease of shoplifting due to innovations like self-checkout, but the drop is significant.

So stores are increasingly letting criminals get away with it. It’s hard to blame them. In 2022 a bodega clerk had murder charges brought against him for defending himself and his store. The charges, thankfully, were dropped after popular backlash. But recently a man in New York was arrested for shooting a would-be burglar in the New York City subway. Private persons seem to face much more legal scrutiny defending property than do police officers.

With charges and arrests coming to individuals defending property against criminals, it’s understandable that stores wouldn’t be interested in risking a large-scale legal battle to stop someone from stealing $50 of merchandise.

This combination of smash-and-grab style theft and lowered willingness on the part of businesses to prevent crime may signal that the shrinkage rate, although still lower than it was in 2000, is bound to get worse if current trends continue. If people expect to get away with theft without being stopped, it becomes cheaper to be a thief. When something becomes cheaper, we should expect more of it.

In any case, it seems the shoplifting epidemic is a bit of a mixed bag. While raw numbers are up, rate increases are small and rates are still lower than in times past. However, certain aspects indicate a reasonable cause for concern among retailers.

The post Is the Shoplifting Epidemic Fake Bad News? Yes and No was first published by the Foundation for Economic Education, and is republished here with permission. Please support their efforts.

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