NRF Corrects Misreported Data, Highlights Organized Retail Crime

The National Retail Federation (NRF) recently corrected a previous claim concerning inventory losses or “shrinkage,” after a media investigation exposed inaccuracies in its analysis.

In April, the NRF reported that approximately 50% of the $94.5 billion losses reported due to shrinkage in 2021 were traced back to organized retail crime (ORC). However, this contradicted the NRF’s own annual shrink survey, which suggested that all external theft, including those not related to organized groups, only accounted for 37% of the 2021 losses.

The NRF retracted its claim, recognizing the inherent difficulty in accurately collecting theft data. Despite this, the association still underscores the critical problem of organized retail crime impacting retailers nationwide, fueling its lobbying effort for legislation enforcing stricter penalties against organized theft.

This isn’t the NRF’s first instance of publishing incorrect data. An earlier survey reported retailers facing a $94.5 billion in inventory loss in 2021, calculated based on preliminary retail sales data from the U.S. Census Bureau. However, when the final Census Bureau figures were lower than preliminary estimates, the NRF’s calculated shrinkage losses were off by $600 million, a difference which was not corrected in its initial survey.

Organized retail crime typically involves structured groups shoplifting from stores and then reselling the stolen items online or via informal street and flea markets. Retailers often reference ORC as a significant problem that affects their stores, employees, and profitability. Consequently, they’re conducting a coordinated lobbying effort to persuade state and federal lawmakers to implement laws that would enforce stricter punishment for organized theft offenses.

The NRF withdrew its claim after Retail Dive’s investigation published in late November brought the inconsistency to light. A spokesperson for NRF, Mary McGinty, informed CNBC that the statement was based on a 2021 testimony to the U.S. Senate made by Ben Dugan, currently an asset protection executive at CVS Health and ex-president of the advocacy group, the Coalition of Law Enforcement and Retail (CLEAR). This testimony alleged that ORC accounted for an annual loss of $45 billion for retailers, according to CLEAR’s approximations.

McGinty explained to CNBC that the statement claiming nearly 50% of shrinkage was attributable to ORC resulted from a mistake by an analyst from K2 Integrity, which collaborated on the NRF’s April report. The analyst incorrectly associated the results of the NRF’s 2021 survey with Dugan’s assertion. As a result, the NRF updated the report and eliminated this claim.

Despite the retraction, McGinty emphasized the widely accepted fact that organized retail crime has a significant negative impact on retail businesses across all sizes and communities nationwide. However, she also recognized the inherent difficulty in accurately collecting theft data.