Micah Loewinger: From WNYC in New York. This is On the Media. Brooke Gladstone is off this week. I'm Micah Loewinger. You might not know it, but recently there was some breaking news in the retail world. It has links to a story that has been doing the rounds for quite a while now.
Female Speaker 2: Tonight a rash of smash-and-grab thefts targeting retailers around the country. Just as the holiday shopping season picks up.
Female Speaker 3: A mob of 20 to 30 male and female suspects wearing masks and hoodies, seen snatching merchandise running out of Nordstrom and escaping.
Female Speaker 4: Items that you would normally just grab and throw in your cart are now under lock and key.
Male Speaker 1: This thing is an epidemic. It's spreading faster than COVID, Steve.
Micah Loewinger: Sensational reports used a new term Organized Retail Crime.
Female Speaker 1: Retailers we talk to are losing billions of dollars to organize retail crime, and authorities are warning that this has become an absolute threat to public safety with violent gangs, dangerous international crime rings, and even groups with suspected ties to terrorism increasingly getting involved.
David Johnston: Whether it's new laws or amending existing laws to be able to stiffen the penalties for repeat offenders who are doing this for financial gain, it's a start.
Micah Loewinger: That last voice is David Johnston.
Male Speaker 2: He's the Vice President of Asset Protection and Retail Operations for the National Retail Federation.
Micah Loewinger: The National Retail Federation, the NRF, the biggest retail lobbying group representing more than 16,000 companies, including Target and Walmart. If you've seen or read coverage about organized retail crime and the new bills aimed at cracking down on this type of theft, you've likely encountered NRF spokespeople and statistics.
Female Speaker 5: For a broader look at the issue in the retail industry. We want to bring in Matthew Shay. He's National Retail Federation's president and CEO. The NRF's latest report on the issue shows that retail shrinkage is on the rise.
Matthew Shay: The whole issue of shrink and organized retail crime really is a growing and a persistent threat. As the study you referenced just a minute ago determined and really illustrated in very stark ways.
Micah Loewinger: That study, which included some dubious data, is the subject of this piece, but before we go further, I think we should define our terms. Let's start with shrinkage.
[audio playback]
Male Speaker 1: You mean shrinkage?
Male Speaker 2: Yes.
[laughter]
Male Speaker 2: Significant shrinkage.
Male Speaker 1: You feel you were shortchange?
Male Speaker 2: Yes.
[end of audio]
Micah Loewinger: No, not that shrinkage.
Daphne Howland: So Shrink, shrinkage is inventory loss.
Micah Loewinger: Daphne Howland is a senior reporter at Retail Dive, an industry website reporting on news and trends in retail.
Daphne Howland: Unaccounted for inventory what happened to these items, lost, damaged, maybe an accounting mistake, and stolen.
Micah Loewinger: Just the overall number.
Daphne Howland: Overall number of goods unaccounted for in a year.
Micah Loewinger: Then recently we've learned this new term, Organized Retail Crime. It means something very specific. Can you describe it?
Daphne Howland: The NRF has a little bit of a convoluted definition, but it boils down to three or more individuals robbing a store and taking the stolen goods to resell as opposed to personal use. That's key because a lot of shoplifting, whether it's a teenager swiping a pack of gum or maybe an impoverished mother who needs diapers or something, that's personal use, this is a whole different scale. It means someone's going to probably sell it online or through FB Marketplace or a place like that.
Micah Loewinger: In its latest annual report originally released in April, the National Retail Federation estimated that in 2021 shrinkage overall loss of inventory cost these stores $95 billion and that organized retail crime made up nearly half of that. This claim referenced data from another retail association that estimated that groups of thieves had swiped a total of $45 billion worth of stuff in 2021. $45 billion. A couple of weeks ago, Daphne fact-checked that number and found it to be baseless.
Daphne Howland: After my story came out, the NRF removed this reference to $45 billion of losses to organized retail crime from a crime report that they released in April.
Micah Loewinger: It almost sounds small potatoes when you're like, National Retail Federation retracts number from 2021 until you realize that that's the only number they got.
Daphne Howland: And now they don't have it. There is no number related to organized retail crime. That doesn't mean there's not organized retail crime. It just means nobody has a number.
Micah Loewinger: I began trying to figure out how that now retracted claim first entered the NRF's crime report, the media, and even the congressional record, it seemed to get significant attention following a September 2021 Wall Street Journal Profile of a man named Ben Dugan.
Daphne Howland: He heads up a group that is basically a partnership between the retail industry and law enforcement and loss prevention.
Micah Loewinger: CLEAR, the Coalition of Law Enforcement and Retail.
Daphne Howland: He also works for CVS as a key loss prevention officer for them.
Ben Dugan: I'm Ben Dugan. I'm the director of organized Retail Crime and Corporate Investigations for CVS Health.
Ryan: Instead of like Law & Order: SVU, it's like Law & Order CVS.
Ben Dugan: Exactly. Something like that.
Micah Loewinger: This is Dugan speaking with Ryan Knutson, the host of the journal. The flagship Wall Street Journal podcast for an episode all about shoplifting.
Ryan Knutson: One trade group estimates that shoplifting costs US retailers $45 billion a year, which is up 50% from a decade ago.
Micah Loewinger: That trade group is Ben Dugan's CLEAR. Note that in this reference, the $45 billion is attributed to shoplifting writ large, a much bigger bucket than organized retail crime, which is a kind of shoplifting. There's no interrogation of that statistic. No one asks how Dugan got that number in this podcast or in the extensive print profile of Dugan that preceded it. The print story in the Wall Street Journal creates some buzz in the retail world and then two months later we hear from Dugan again, this time on a much bigger stage.
Ben Dugan: Good morning, Chairman Durbin, Ranking Member Grassley, and members of the committee.
Micah Loewinger: Here's Dugan speaking before the Senate Judiciary Committee on November 2nd, 2021.
Ben Dugan: I want to share firsthand today what I've experienced over 30 years of working on this problem. Organized retail crime represents a massive and growing threat to the tune of $45 billion a year. These criminal organizations employ teams or crews of professional thieves that steal the products by any means necessary and sell them through online marketplaces.
Micah Loewinger: Now the $45 billion in losses is attributed solely to organized crime.
Daphne Howland: It's a big claim. It's a definite claim.
Micah Loewinger: Daphne Howland, when she started digging into the 2023 National Retail Federation's report, she found that the source for the claim that roughly half of the shrinkage losses in 2021 came from organized retail crime was Dugan's Senate testimony.
Daphne Howland: Dugan said that CLEAR estimates this $45 billion figure, but I couldn't find any reports or research statements or anything on the CLEAR website or anywhere. Actually, as the LA Times did that same year in 2021, they questioned this number and tried to figure out where it came from.
Micah Loewinger: She eventually just went to Ben Dugan himself and asked where he got that number. In an email that Daphne shared with us, Dugan said the National Retail Federation,
Daphne Howland: That $45 billion was a number offered up by the National Retail Federation in 2016, which was their estimate of total shrink or total inventory loss for 2015.
Micah Loewinger: He goes to the Senate, he tells them that organized retail crime accounts for $46 billion of loss for retailers and he's just talking about a number from 2016 that describes something completely different?
Daphne Howland: Exactly.
Micah Loewinger: The National Retail Federation was saying that roughly half of all shrinkage in 2021 was the result of organized retail crime. Their source was Ben Dugan, who it turns out was quoting old numbers from National Retail Federation, quoting themselves in effect.
Daphne Howland: Quoting themselves and quoting themselves wrongly. Making their own math mistake and it seems like a mistake that should have been caught. Maybe put it this way, it should have been a number whose providence should have been investigated.
Micah Loewinger: We can and should put that $45 billion number to rest. Maybe these lobbying groups don't mind if journalists fail to scrutinize their claims.
Daphne Howland: We've heard from the National Retail Federation saying that organized crime is behind it. I'm seeing estimates here that it's costing retailers nearly $100 billion a year.
Female Speaker 6: Organized retail theft it's a crime that cost businesses $96.5 billion in 2021 according to the National Retail Federation.
Male Speaker 3: The National Retail Federation calls the retail theft and those smash-and-grabs organized retail crime that cost the industry $100 billion in losses in 2021.
Daphne Howland: This just shows that this is a problem not just of confusing numbers, which let's face it, numbers confuse people very easily, it's a confusion of terms. You touched on this before. When the NRF itself introduced its Shrink Report, its annual report on the inventory losses experienced by the industry, the headline of their press release said that it was nearly $100 billion lost to retail crime, when they know very well that it's the total inventory loss.
Micah Loewinger: The total shrink.
Daphne Howland: The total shrink.
Micah Loewinger: Meaning any outlet that told you that crime costs the retail industry $100 billion dollars a year got duped.
Daphne Howland: The industry and many retailers are insisting that this is a real and growing problem. They offer these numbers as evidence of that. I think that if we're going to get to the bottom of it and follow through on the different types of legislation that these groups are proposing, we need to be really well-informed, and right now, we're just not.
Micah Loewinger: Daphne Howland is a senior reporter at Retail Dive. We asked the Wall Street Journal for comment, but at time of recording, we haven't heard back from them. When we reached out to the NRF, they gave us this statement, "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." Ben Dugan sent us a response too saying that he now stands behind the $45 billion figure and, "Equivocating over a number we acknowledge is an estimate misses the point." For the full statements, head to onthemedia.org. Coming up, bad shoplifting coverage leads to bad shoplifting laws. This is On the Media.
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