Chart of the week
Shrink
What does this chart show?
According to transcript data from recent earnings calls, retail executives mentioned “shrink”, also known as theft, twice as much as any other period over the past decade.
Why does it matter?
Prior to the pandemic, shrink had a 7% annual growth rate. After 2020, shrink rose 47% and has settled at this new higher level.
The National Retail Federation (NRF) notes that theft accounted for a $95 billion annual loss in 2021, an amount that equals 1.4% of all retail sales. Target recently warned that organized retail crime will hurt profitability by $500 million this year. Walgreens noted that shrink will be 3.25% of company revenue, echoing reports from companies like Foot Locker, Ulta Beauty, Dollar General, and Dicks Sporting Goods.
Notably, in an economy with 1.6 job openings for every job seeker, more than half of workers surveyed in Verkada’s 2023 Workplace Safety Survey said they would resign in the next year if physical safety in their workplace does not improve soon.
The Bottom Line
If retail theft isn’t brought under control, prices will be higher and/or stores will close.