The National Retail Federation had said that nearly half of the industry’s $94.5 billion in missing merchandise in 2021 was the result of organized theft. It was likely closer to 5 percent, experts say.
A national lobbying group has retracted its startling estimate that “organized retail crime” was responsible for nearly half the $94.5 billion in store merchandise that disappeared in 2021, a figure that helped amplify claims that the United States was experiencing a nationwide wave of shoplifting.
The group, the National Retail Federation, edited that claim last week from a widely cited report issued in April, after the trade publication Retail Dive revealed that faulty data had been used to arrive at the inaccurate figure.
The retraction comes as retail chains like Target continue to claim that they are the victims of large shoplifting operations that have cut into profits, forcing them to close stores or inconvenience customers by locking products away.
The claims have been fueled by widely shared videos of a few instances of brazen shoplifters, including images of masked groups smashing windows and grabbing high-end purses and cellphones. But the data show this impression of rampant criminality was a mirage.
In fact, retail theft has been lower this year in most of the country than it was a few years ago, according to police data. Some exceptions, including New York City, exist. But in most major cities, shoplifting incidents have fallen 7 percent since 2019.
Organized retail crime, in which multiple individuals steal products from several stores to later sell on the black market, is a real phenomenon, said Trevor Wagener, the chief economist at the Computer & Communications Industry Association, who has conducted research on retail data. But he said organized groups were likely responsible for just about 5 percent of the store merchandise that disappeared from 2016 to 2020.
He emphasized that there’s “a lot of uncertainty and imprecision” in measuring losses, because it is difficult to parse out what is shoplifting and what is organized crime.
Mr. Wagener testified in Congress in June about the discrepancy in the National Retail Federation’s report.
Even as it retracted the figure and revised the report, the federation, which has more than 17,000 member companies, insisted in an emailed statement that its focus on the problem was appropriate.
“We stand behind the widely understood fact that organized retail crime is a serious problem impacting retailers of all sizes and communities across our nation,” the statement said. “At the same time, we recognize the challenges the retail industry and law enforcement have with gathering and analyzing an accurate and agreed-upon set of data.”
At issue is “total annual shrink” — the industry term for the value of merchandise that disappears from stores without being paid for, through theft, damage and inventory tracking mistakes.
Mary McGinty, a spokeswoman for the federation, said the error was caused by an analyst from K2 Integrity, an advisory firm that helped produce the report.
The analyst, who was not named, linked a 2021 National Retail Federation survey with a quote from Ben Dugan, the former president of the advocacy group Coalition of Law Enforcement and Retail, who said in Senate testimony in 2021 that organized retail crime “accounts for $45 billion in annual losses for retailers.”
Mr. Dugan was citing the federation’s 2016 National Retail Security Survey, which was actually referring to the overall cost of shrink in 2015 — not the amount lost to just organized retail crime, Ms. McGinty said.
Alec Karakatsanis, a civil rights lawyer who has studied and critiqued how the media has covered organized retail crime, said that the retraction underscored how some news organizations, which have extensively covered the issue of shoplifting, were “used as a tool by certain vested interests to gin up a lot of fear about this issue when, in fact, it was pretty clear all along that the facts didn’t add up.”
One of the most prominent examples came in October 2021, when Walgreens said it would close five stores in San Francisco, citing repeated instances of organized shoplifting. The company’s decision had come months after a video seen millions of times showed a man, garbage bag in hand, openly stealing products from a Walgreens as others watched.
But an October 2021 analysis by The San Francisco Chronicle showed that Police Department data on shoplifting did not support Walgreen’s explanation for the store closings.
Eventually, Walgreens retreated from its claims. In January, an executive at the company said that Walgreens might have overstated the effects on its business, saying: “Maybe we cried too much last year.”
Mr. Karakatsanis said the exaggerated narrative of widespread shoplifting was weaponized by the retail industry as it lobbied Congress to pass bills that would regulate online retailers, which they claim is where much of the stolen product ends up.
Commentators and politicians have seized on the issue. Earlier this year, Gov. Gavin Newsom, Democrat of California, responded to reports of large-scale thefts in the state with a call for tough prosecution of shoplifters and a plan to invest millions of dollars to fight “organized retail theft.” Gov. Ron DeSantis, Republican of Florida, signed a bill last year aimed at retail theft, and former President Donald J. Trump called for violence, telling Republican activists in California this year that the police should shoot shoplifters as they are leaving a store.
Mr. Wagener, the chief economist at the Computer & Communications Industry Association, said that the National Retail Federation’s report in April immediately stuck out to him as wrong. The error was troubling, he said, because the federation has long been viewed as a trusted provider of data for the industry.
What made the federation’s mistake even more surprising, Mr. Wagener said, was how starkly the figure contrasted to the group’s own previous findings.
In 2020, the federation said in a report that organized retail crime cost retailers an average of $719,548 per $1 billion in sales — a number that would point nowhere near the roughly 50 percent claim made in the April report.
Another National Retail Federation survey showed that all external theft — including thefts unrelated to organized retail crime — accounted for 37 percent of shrink, a figure that would still be billions of dollars less than the incorrect estimate of 50 percent made in April.
“It would be a bit like the census claiming that nearly half of the U.S. population lives in the state of Rhode Island,” Mr. Wagener said.
Source: Economy - nytimes.com
