ALEXANDRIA, Va.—Retail shrinkage dropped during the pandemic as potential shoplifters stayed home but spiked in 2022, outpacing sales gains. Dean Rosenblum, a senior retail analyst at Bernstein Research, told the Wall Street Journal that theft is becoming a big enough problem that it’s starting to affect margins, which is why retailers are talking about it more frequently.
“We definitely had an uptick since last year,” Macy’s Chief Executive Jeff Gennette told analysts, the Journal reports. “It’s an industrywide trend.”
Target Corp. said in November that it expected shrinkage to reduce gross margins for the recently completed fiscal year by more than $600 million.
“Seven years ago, internal theft was the largest category of loss by retailers,” said David Johnston, the vice president of asset protection and retail operations at the National Retail Federation (NRF). “Now, it’s external theft.” One factor is organized retail crime. “These highly sophisticated criminal rings jeopardize employee and customer safety and disrupt store operations," said Mark Mathews, NRF vice president for research development and industry analysis.
NACS Magazine covered how to prevent shrinkage in “Security Check” in its September issue.
At the NACS Leadership Forum in February, Chris McCarrick, head of asset protection solutions, safety and technology at Kroger, shared how the company is using AI solutions to identify security priorities and help combat retail crime. The goal is to simplify the shopping experience and help to protect customers and store employees.
When customers use a self-checkout, the scanner may not always work, a barcode isn’t recognized or an item is inadvertently missed, McCarrick explained. The scan detection is linked to the point-of-sale system, and these types of errors are easily resolved.
“Most missed scans are not malicious,” said McCarrick. For the ones that are, however, like in the case of product switching (also known as item swapping), the transaction is immediately stopped. “This is a game changer,” he said.