Shoplifting and other inventory loss cost retailers $112 billion last year

• Retailers lost a record $112.1 billion to inventory shrink in 2022, per an industry survey.
• The number is up from $94 billion in 2021, and represents 1.6% of total sales.

Retailers reported losing a record $112.1 billion to inventory shrink in 2022, according to the National Retail Federation's annual Retail Security Survey, published Tuesday.

External theft was the largest contributing factor to shrink, followed by theft by employees. Combined, the two categories of theft account for roughly two-thirds of total shrink.

While the total losses are roughly $18 billion higher than the prior record of $94 billion in 2021, shrink as a percentage of sales ticked back up to 1.6% after it dipped to 1.4% in 2021.

In other words, the problem is still in line with historical norms relative to revenues, at least in financial terms.

Recent analysis has suggested that theft has played a smaller role in squeezing retailers' profit margins than some have blamed it for.

But in a significant shift, more than two-thirds of respondents said they were seeing higher levels of violence and aggression from retail criminals than in prior years.

For example, Target CEO Brian Cornell noted in August that shoplifting incidents with violence or threats of violence had more than doubled since January.

"Retailers are seeing unprecedented levels of theft coupled with rampant crime in their stores, and the situation is only becoming more dire," NRF's head of asset protection and retail operations, David Johnston, said in the report.

"Far beyond the financial impact of these crimes, the violence and concerns over safety continue to be the priority for all retailers, regardless of size or category," he added.

Nearly half of survey respondents said they reduced specific stores' operating hours in response to retail crime, while 28% reported closing specific stores altogether.

Some of the products most commonly stolen by organized retail crime groups include alcohol, branded athletic shoes, infant formula, and shaving products, the report found.

The report hailed the passage of new federal legislation that now requires online marketplaces like Amazon, Facebook, and eBay to verify the identities of "high-volume third-party sellers" who may be selling stolen or counterfeit goods.

The NRF also said it has backed retail crime laws that have passed in 34 states.

As with the prior four years, Los Angeles topped the list of metropolitan areas most affected by organized retail crime. The Bay Area came in second for the third year, while Houston overtook New York City for the third spot.

The survey polls 177 brands across 28 retail sectors, representing $1.6 trillion annual sales in 2022.