Organized crime is troubling retailers and sparking debate

America’s biggest retailers say organized retail crime has grown into a multibillion-dollar problem, but the effectiveness of their strategies to tackle it and the accuracy of their data have come into question.

Over the past several years, companies such as Home Depot, Lowe’s, Walmart, Best Buy, Walgreens and CVS have raised the alarm about organized gangs of thieves breaking into their stores and selling items on online marketplaces.

They have poured money into anti-theft strategies such as plastic cases, metal detectors, motion detectors and AI-powered cameras, and have warned that if the problem doesn’t improve, consumers could end up paying the price.

“Theft is a problem. It’s bigger than it’s been historically,” Walmart CEO Doug McMillon told CNBC in December. “If this is not corrected over time, prices will be higher and/or stores will close.”

However, the issue is not as clear-cut as retailers and trade groups have made it appear.

Research by the National Retail Federation shows that retail shrinkage will cost retailers $94.5 billion in 2021, up from $90.8 billion in 2020, but the data is largely qualitative and cannot be fact-checked because it was collected from anonymized retailers.

Additionally, the $94.5 billion in losses points to overall shrinkage, meaning the difference between the inventory a company carries on its balance sheet and the inventory it actually sells. This difference covers items that were stolen from the store, but also includes inventory that is damaged, lost, or stolen by employees.

Out-of-state retail crime accounts for just 37 percent of those losses, or about $35 billion, NRF data shows.

At least one major retailer recently admitted it may have exaggerated the problem.

“Maybe we cried too much last year,” Walgreens Chief Financial Officer James Kehoe said on an investor call in January when asked about the shrinking. “We’re established,” he added, saying the company is “pretty happy with where we are.”

Still, law enforcement and retailers insist organized retail crime remains a problem and said they stand by their data.

“I can tell you that in our world, we know that crime is increasing. We see it every day in our stores,” Scott Glenn, Home Depot’s vice president of asset protection, told CNBC. “Our internal data shows us that it’s year-over-year and growing at a double-digit rate.”

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