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Wall Street is desperately trying to figure out where consumer demand is going. Alongside sentiment and sales, there’s another indicator worth watching: shoplifting.
This metric is rarely talked about. It’s uncomfortable for retail executives to acknowledge that their customers, or worse still, their employees, are stealing from them. But theft has long been a bugbear for retailers, and it’s now been thrust into the spotlight by a spate of increasingly violent robberies across the US.
Although these losses were the work of organised criminal gangs, and far from small-scale pilfering, the two can’t be completely disaggregated. Shoplifting, large and small, tends to rise during times of crisis. As inflation makes things harder for more families, retail theft data will be a telling gauge for consumer distress.
Jack L Hayes International, Inc, a Florida-based loss-prevention consultancy, has been surveying retailers on theft for 33 years. In 2020, the store groups reported a significant increase in the instances of theft for need. With US food prices rising the most in 13 years in November, expectations are that this will become even more of a problem in 2022.
This comes against the backdrop of a rise in organised retail crime. The Retail Industry Leaders Association, whose members include Target Corp, Best Buy Co Inc and Walgreens Boots Alliance Inc, estimates that $68.9 billion worth of products were stolen from retailers in 2019, about 1.5% of total retail sales, due to organized gangs. The average amount recovered from apprehended shoplifters has risen sharply since 2016, as raiders have become more prolific, according to Jack L. Hayes.
In the past, stolen goods were often disposed of through flea markets or pawn shops. The explosion in online shopping has made it easier for gangs to resell them without getting caught. Stores are seeing the typical targets go missing — razor blades, infant formula, cosmetics and personal care products can be easily sold off again — but they’re also reporting more theft of larger-ticket items — from designer clothes and handbags to power tools.
After a rollercoaster two years for many retailers, another step up in shoplifting will be a big worry for stores — and for Wall Street too. It would show that more consumers are struggling under the weight of inflation, and are turning to increasingly desperate measures to cope.
—Bloomberg