With more retailers taking action against the rise in criminal activity, one industry official is sounding the alarm on the “persistent threat” of retail-specific crime.
“This is a huge and growing problem, a persistent threat that’s gotten much worse in the last several years,” National Retail Federation (NRF) CEO Matt Shay said on “Varney & Co” Wednesday. “This is stealing at the end of the day. So I think it’s well documented. There’s greater awareness about this.”
According to the most recently available NRF data, retail shrink in 2021 was 1.4%. The shrinkage – meaning losses coming from causes other than sales – cost retailers $94.5 billion, up from $90.8 billion in 2020.
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While the 2023 Retail Security Survey has not been released, the data from 2022’s report showed, on average, retailers had a 26.5% increase in organized retail crime in 2021. Additionally, the survey found that 8 in 10 retailers reported an increase in violence connected to retail theft.
“We’ve documented organized retail crime in this year is going to be more than $100 billion,” Shay said. “That’s probably underreporting the amount of theft that goes on.”
Shay added the shrinkage for retailers can range between 15%-20%, adding that the data is only “accurate in some markets, in some stores and some local stores.”
The NRF CEO noted there are “lots of contributing factors” to the growing shrinkage among retailers. In addition, there are a number of problems that require specific solutions.
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“There are lots of contributing factors here that go back many years, some of which go to the way in which we classify these crimes,” he told host Stuart Varney. “So property crimes, no longer felonies, misdemeanors in states and jurisdictions across the country…prosecutors de-emphasizing prosecution of these crimes; police forces understaffed, making priority decisions about other places to put their resources not able to pursue these crimes… There’s a whole bunch of factors.”
Shay broke down the problem into three parts: the environment of a retailer, the actual crimes committed and the value of goods beyond the retailer.
The CEO’s comments on the environmental problem of retail crime echo the warnings of former Home Depot CEO Bob Nardelli.
“This environment under this administration is fueling a lawless society, and we’ve got to get this back under control. I fear where this is headed,” Nardelli said on “Cavuto: Coast to Coast” Friday.
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The NRF has been active in helping push legislation to address the other issue related to the crime problem, including the actual crimes committed and the value of counterfeit goods.
“Let’s go after those marketplaces where counterfeit stolen goods are sold. So that was the Inform Act – we got that passed last year – elevates transparency about the provenance of the goods, the identity of the seller.. That’s only been in effect for seven weeks, but that’s going to have a real impact,” he said.
The Integrity, Notification, and Fairness in Online Retail Marketplaces (INFORM) for Consumers Act went into effect in June. It is a law designed to make it more difficult for organized retail crime groups to sell illicit goods through online marketplaces like Amazon or Facebook.
Online marketplaces are now required to collect, verify and disclose certain information from third-party sellers that conduct at least 200 transactions resulting in total revenues of $5,000 in a year.
Shay said the NRF is, additionally, pushing for the Combating Organized Retail Crime Act, which has also garnered bipartisan support. The act would help establish a multi-agency federal response to growing retail shrinkage and “ensure there’s coordination across federal, state, local agencies and resources.”
Another state action Shay discussed was working to reform California’s Proposition 47. The voter-approved measure which was passed in 2014 downgraded charges pertaining to certain theft and drug possession crimes from a felony to a misdemeanor if the value of the stolen goods is less than $950. It has been blamed for much of the state’s rising theft and crime.
“So you could walk into a Macy’s, a Nordstrom, a Saks, and take $900 worth of goods in the same day, come back the next day and do it again,” Shay explained. “We’ve got the overwhelming majority of prosecutors in that state and the governor helping us with this and supporting reform of Proposition 47.”
Like Nardelli, Shay affirmed the people who get hurt most by the surge in retail shrinkage and rising crime are the ones in the local communities.
“There have been tragedies. There have been people killed, badly injured. The level and incidents and violence that goes on now that we never saw at this level before. But ultimately the losers are those communities, those customers. They don’t have the goods. The goods are locked up. They’re out of stock or the stores close” he said.
“So it’s a persistent, pervasive problem, and we’re working hard to try to solve it.”
FOX Business’ Daniella Genovese and Fox News’ Louis Casiano contributed to this report.
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