The National Retail Federation (NRF) revised its previous estimates on the impacts of organized retail crime. The NRF made the change on Friday, Dec. 1, following reporting from Retail Dive that found errors in the data, the outlet reported.

The trade association released its organized retail crime report in April 2023 with K2, a financial crimes risk management firm. The report previously attributed nearly half of retail shrink to organized retail crime. The report originally stated that of the $94.51 billion in industry shrink in 2021, “nearly half” was attributable to organized retail crime. However, that estimate citing the National Coalition of Law Enforcement and Retail was based on NRF’s 2016 report on shrink, Retail Dive reported.

Shrink encompasses lost inventory for retailers, including internal theft, external theft, and items lost or unaccounted for for non-criminal reasons. The NRF removed the assertion from the updated report. It no longer makes any specific claims about the financial impact of organized retail crime in dollars.

“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. 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 to measure the number of incidents in communities across the country. Retailers and law enforcement agencies continue to experience daily incidents of theft, partner in large-scale investigations and report recoveries of stolen retail goods into the millions of dollars,” a spokesperson from The NRF said in a written statement.

What is organized retail crime?

The NRF report defines organized retail crime as “systematic large-scale theft of retail goods from manufacturers, logistics and transportation providers, distributors, or retailers and the subsequent resale of stolen goods for financial gain to wholesalers, retailers, or individual consumers, typically for a fraction of the retail cost.”

It distinguishes organized retail crime from other types of shoplifting by the involvement of at least three people, and the intent to sell goods for a profit rather than keeping them for personal use.

Retail crime wasn’t that much higher in 2022 than in previous years, according to the NRF’s annual security survey released in September. The survey found that the average shrink rate grew slightly year over year, to 1.6% from 1.4% in 2021. About 65% of shrink comes from theft, roughly on par with historical levels. External theft, including organized retail crime, contributed 36.2% to the total shrink figures. Internal theft (28.9%) and process and control failures (27.3%) also contributed to shrink levels.

Retailers cite organized retail crime

Still, theft and organized retail crime in particular have been hot topics for retailers.

Target Corp. warned that retail crime could cut $500 million from 2023 profits in a Q1 earnings statement.

“While there are many potential sources of inventory shrink, theft and organized retail crime are increasingly important drivers of the issue,” CEO Brian Cornell said in a written statement. “We are making significant investments in strategies to prevent this from happening in our stores and protect our guests and our team. We’re also focused on managing the financial impact on our business so we can continue to keep our stores open, knowing they create local jobs and offer convenient access to essentials.”

“Shrink levels are increasing for almost all retailers,” Michael Relich told Digital Commerce 360. Relich is co-CEO of apparel brand Pacific Sunwear of California Inc., better known as PacSun.

In January, Lowe’s Cos. Inc. debuted Project Unlock, using RFID chips to activate power tools at checkout and reduce crime.

“Across the retail industry, brazen theft inside of stores has been increasing,” Josh Shabtai, Lowe’s Innovation Labs senior director of ecosystem, told Digital Commerce 360 at the time.

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